Home Alternative Investments Connecticut directing additional $1.6 billion to pension funds

Connecticut directing additional $1.6 billion to pension funds

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Connecticut Retirement Plans & Trust Funds, Hartford, will receive $1.6 billion in additional contributions this next fiscal year due to a state budget surplus.

The additional contributions will bring to a total of $3.6 billion to be transferred to the retirement plans in the fall, according to a May 20 letter from the state Office of Policy and Management to Comptroller Natalie Braswell.

Of that total, $2.7 billion will be contributed to the $22.5 billion State Employees Retirement Fund and $903 million to the $16.9 billion Teachers’ Retirement Fund.

The additional contributions are the result of a state budget surplus caused by higher tax revenues in the current fiscal year ending June 30.

Gabriella Martin, spokeswoman for state Treasurer Shawn Wooden, who oversees the retirement plans, said in an email that a certain amount of surplus goes into the state’s budget reserve fund, but if that fund reached 15% of general appropriations in the same fiscal year, the excess must be appropriated to the two retirement systems.

“This year’s budget directed contributions made through the end of FY 23 first to SERS, up to 5% of its unfunded liability, next to TRS, up to 5% of its unfunded liability, and the remaining to SERS,” Ms. Martin said.

“With regards to the question about how specifically the capital will be invested, these excess funds will be invested consistent with our strategic asset allocation guidelines and investment policy just like the other funds in the Connecticut Retirement Plans and Trust Funds,” Ms. Martin said.

The two pension funds share common target allocations of 20% domestic equities; 19% real assets; 13% core fixed income; 11% international developed markets equities; 10% private investments; 9% emerging markets equities; 5% each emerging markets debt and private credit; 3% each alternative investments and high yield; and 2% liquidity fund.

As of March 31, the teachers fund’s actual allocation was 22.4% domestic equities; 14.5% real assets; 12.3% international developed markets equities; 11.4% core fixed income; 11.2% private investments; 10.3% emerging markets equities; 5.9% high yield; 4.6% emerging markets debt; 3.9% alternative investments; 2% private credit; and 1.5% liquidity fund.

As of March 31, the state employees fund’s actual allocation was 22.1% domestic equities; 14.4% real assets; 12.2% international developed markets equities; 11.1% core fixed income; 10.8% private investments; 10.2% emerging markets equities; 5.8% high yield; 4.5% emerging markets debt; 3.8% alternative investments; 3.2% liquidity fund; and 1.9% private credit.

Ms. Martin could not be immediately reached for further information.

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