PERS unfunded liability hits all-time high $13.5 billion

The Public Employees’ Retirement System of Nevada (PERS) reported a record-breaking shortfall of $13.457 billion last month, according to data published in the System’s comprehensive annual financial report for the fiscal year ending June 30, 2016.

Annual contributions likewise hit a record-high, coming in at around $1.7 billion. As a result of these record-high costs, most new members are now projected to be “net losers” under PERS — meaning the value of their future retirement benefit will be worth less than its total cost.

The report also confirms PERS continues to excel at keeping both administrative and investment fees low, with investment fees remaining flat since the previous year at around $39 million — or about 0.1% of total fund size.

While investing exclusively in index funds keeps fees low, there is a tremendous risk of future shortfalls given the System’s assumed 8 percent annual investment return — which far exceeds the projections of PERS investment consultants, other pension funds, Warren Buffett and many others.

2017 brought a significant personnel change to PERS. Longtime investment consultant Ken Lambert has chosen to move on, to be replaced by former president of Wilshire Consulting Julia Bonafede — who authored the second opinion review commissioned by PERS in 2015, which found that PERS was unlikely to hit its investment target over the next decade.

To read more about PERS, be sure to visit http://www.npri.org/issues/detail/pers


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