View
0
Download
0
Category
Preview:
Citation preview
Charting The Course
popular ANNUAL FINANCIAL REPORTfor the fiscal year ended june 30, 2012
Strength. Service. Commitment.
San Diego County Employees Retirement Association
San Diego County, CA
P CP CPublic Pension Coordinating Council
Public Pension Standards Award For Funding and Administration
2012
Presented to
San Diego County Employees Retirement Association
In recognition of meeting professional standards for plan funding and administration as
set forth in the Public Pension Standards.
Presented by the Public Pension Coordinating Council, a confederation of
National Association of State Retirement Administrators (NASRA) National Conference on Public Employee Retirement Systems (NCPERS)
National Council on Teacher Retirement (NCTR)
Alan H. Winkle
Program Administrator
This Popular Annual Financial Report (PAFR) of San Diego County Employees Retirement Association (SDCERA) summarizes the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2012. For more detailed information, please refer to the CAFR online at www.sdcera.org.
INVESTMENT ACTIVITIESFor fiscal year 2012, SDCERA’s gross gains were 6.5%, outperforming 95% of its public fund peers with assets over $1 billion. Over the past 25 years, the average annual gains have been 9.2%, exceeding the 8% assumed rate of return needed to fund the benefit.
FUNDINGA retirement system’s funded ratio, a ratio of valuation value of assets to the actuarial accrued liabilities, is one measurement by which it is typically evaluated. Based on the most recent actuarial valuation report as of June 30, 2012, the valuation value of assets was $8.6 billion and the actuarial accrued liability totaled $10.9 billion, resulting in an unfunded actuarial accrued liability of $2.3 billion. SDCERA’s funded ratio is 78.7%, surpassing both the average of 74.9% for public funds and Fitch Ratings’ standard of 70% for adequate funding.
MAJOR INITIATIVES AND SIGNIFICANT EVENTS
Investment returns outperform peers In an economic climate where many pension funds are reporting returns ranging from 1% to 2%, SDCERA’s fiscal year-end return of 6.5% placed the Fund in the top 5% of public plans with assets over $1 billion. SDCERA outperformed 95% of its peers over the one-, two- and three-year periods ending June 30, 2012, as reported by the Wilshire Trust Universe Comparison Service (TUCS). This reinforces the prudence of SDCERA’s management of its diversified portfolio that produces strong returns in up markets and protects those gains in down markets.
Stakeholder communications SDCERA reduces confusion in the continuing public debate by keeping key stakeholders informed and engaged about the Fund’s purpose and design.
Through these efforts, stakeholders have learned about SDCERA’s prudent investment strategy and cost-effective member benefits. A community benefits when local retired members receive a lifetime income stream. A recent study found that pensions support 324,761 jobs and account for $52.5 billion in economic output in California.
AWARDS AND ACHIEVEMENTS IN REPORTINGStandard & Poor’s Ratings Services (S&P) affirmed the AAA issuer credit rating and stable outlook for SDCERA. The AAA rating is the highest possible, as an assessment of the organization’s overall capacity to pay its financial obligations.
SDCERA was awarded the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA) of the United States and Canada. The Public Pension Coordinating Council (PPCC) honored SDCERA for meeting the professional standards for plan design and administration.
I want to express my thanks to the Board and the staff for their dedication and commitment to SDCERA and continued success of the Fund.
Brian P. WhiteChief Executive Officer
MISSION STATEMENT
SDCERA’s mission is to
prudentlymanage the fund,
efficiently
administer benefits and
provide superior service
to SDCERA members.
SDCERA provides services to nearly 37,000 members
Prudent investing and careful management ensures a reliable and
secure benefit for eligible retirees.
Healthy funded ratio: fund financially sound
SDCERA’s funded ratio of 78.7% surpasses the public pension
fund average of 74.9% and Fitch Rating’s standard of 70% for
adequate funding.
70%
74.9%
Average of public pension funds
Fitch Ratings’ standard for adequate funding
SDCERA Funded Ratio
78.7%
Asset allocation fuels SDCERA’s success
The portfolio is designed to provide steady gains in up markets and
protect those gains in volatile markets. The diversified investment
portfolio helped weather the volatile markets in the past few years.
10,000
20,000
30,000
40,000
Deferred Members
Active Members
Retired Members
201220072002199719921987
*
*1987-1988 deferred member data unavailable.
SDCERA’s long-term returns outperform 91% of peers
SDCERA’s 25-year annualized return of 9.2% outperformed 91% of its
peers and surpassed the 8% assumed rate of return needed to fund
the benefit.
$0
2
4
6
8
$10
2012200720021997199219871984
Continued growth drives assets to $8.5 billion
SDCERA’s market value of assets grew to $8.5 billion through its
diversified investment portfolio. The fund is well positioned to reduce
investment risk while producing strong returns.
25-year return, 9.2%
Assumed rate of return,
8%
Adm
inistration Expenses
Retiree health care program
Investment Expenses
Benefit Payments
Fund Assets
Administration expenses$10.9 million
Retired member health care program, $21.3 million
Investment expenses$86.0 million
Benefit payments$496.3 million
Fund net assets$8.5 billion
Below-limit costs preserve assets
SDCERA keeps administrative expenses well below the legal limit.
After deducting expenses, the fund’s net assets are $8.5 billion.
billi
ons
All data is as of June 30, 2012.
Treasury Inflation ProtectedSecurities 5%, $455.6
Natural Resourcesand Other Real Assets
11%, $891.8
Real Estate 11%, $899.1
Emerging MarketEquities 5%, $402.2
High Yield FixedIncome/Credit 6%, $517.6
Private Equity 10%, $878.5
Global DevelopedEquity 19%, $1,655.0
Emerging Market Debt (Local) 10%, $814.0
Relative Value Strategies 10%, $829.1
Global Macro/CTA 10%, $882.1
U.S. Treasuries 28%, $2,421.2
Inflation-sensitive assets
Stable value assets
Growth oriented assets
Exposure is expressed as a percent of the fund’s net asset value and totals to 125%. Dollars are expressed in millions.
(gross of fees)
-25
-20%
-15%
-10%
-5%
0
5%
10%
15%
20%
25%
Total Fund Return
201220072002199719921987
San Diego County Employees Retirement Association
2275 Rio Bonito Way, Suite 200San Diego, CA 92108-1685
Call Center: 619.515.6800 or 888.4.SDCERA www.sdcera.org twitter.com/sdcera
Chief Executive O�cer
Investments
Members
Operations
Board of Retirement
MEMBERS Member Services
DAVID A. MYERSChairman
E.F. “SKIP” MURPHYVice Chairman
DICK VORTMANNSecretary
MARTIN CHERRYTrustee
PETER Q. DAVISTrustee
MARC DOSSTrustee
DIANNE JACOBTrustee
DAN MCALLISTERTreasurer-Tax Collector
DOUGLAS ROSETrustee
JAMES W. FEELEYAlternate trustee
TIM HANCOCKAlternate trustee
BRIAN P. WHITE
MARK MIMNAUGHChief Operating Officer
JOHANNA SHICKDirector
PUBLIC MARKETSPortfolio Strategist
PRIVATE MARKETS
Strength. Service. Commitment.
This summary annual report is derived from the information contained in SDCERA’s Comprehensive Annual Financial Report (CAFR).
This summary does not represent our financial information in a manner to conform to Generally Accepted Accounting Principles
(GAAP). However, SDCERA’s CAFR, which conforms to GAAP, provides a comprehensive overview of SDCERA’s financial and
operating results. SDCERA’s CAFR is available for review at SDCERA’s office or on our website. SDCERA documents are available in
alternative formats by request.
Cover Photo: Mt. Palomar observatory at dusk, used in compliance with the license agreement.
Recommended