What did the 2008 stock market crash mean for PERA?
PERA ended up losing 25.9% of their fund in the 2008 stock market crash. Ultimately, this meant that PERA was going to run out of money in approximately 30 years and wouldn’t be able to pay out all the benefits owed to employees. This spurred a concerted and massive effort to make changes to bring the fund back onto a path of fiscal stability. In 2010, the bi-partisan Senate Bill 1 was passed to course correct (which we will talk more about in detail next week).
While the market will inevitably always have its ups and downs, one of the biggest benefits of being a part of PERA – where you aren’t investing on your own, but as a massive pool of dollars – is the ability to better ride out the ups and downs of the market. In recent years, there have been many discussions about the market and how PERA is doing. Next week, we expect the PERA Board to release their Comprehensive Annual Financial Report, also known as the CAFR. This report will tell us how PERA did in 2016. Before this update, let’s take a look back at how PERA has done historically.
As we continue the conversation this summer and fall about potential changes to PERA, it is important to remember the role the market plays in PERA and have an honest conversation about both past and future performance of the market. We also must remember that PERA doesn’t only invest in the market; they have a very diverse portfolio that helps them gain better returns than many of us could achieve on our own.