The Kentucky Public Pensions Authority (KPPA) announced that the average composite return for pension assets under management was 10.7% for the fiscal year that ended June 30, 2024, while insurance trust assets under management earned 11.4%.
All pension and insurance portfolios returned significantly more than their actuarial assumed rates of return, which are 6.5% for all County Employees Retirement System (CERS) pension and insurance portfolios and the Kentucky Employees Retirement System (KERS) and State Police Retirement System (SPRS) insurance trusts, 6.25% for the KERS Hazardous pension portfolio, and 5.25% for the KERS Nonhazardous and SPRS pension portfolios.
The CERS Nonhazardous and Hazardous pension and insurance portfolios returned an average of 11.7% during the fiscal year. As a result, total assets in the systems overseen by the CERS Board of Trustees reached a record $18.3 billion in Fiscal Year (FY) 2024, driven by strong investment returns and employer contributions.
The CERS Nonhazardous pension plan is 56% funded, and the CERS hazardous plan is 51% funded.
“As Chair of the CERS Board of Trustees, I am proud to see our pension and insurance funds not only surpassing our actuarial assumed rate of return but also outperforming our peers on a national level,” said George “Lisle” Cheatham. “This strong performance reflects our ongoing commitment to prudent investment strategies that safeguard the retirement security of our members while responsibly managing risk. Reaching a record $18.3 billion in assets is a significant milestone, and we will continue to focus on achieving sustainable growth for the long-term benefit of our members and their families.”
This is the second consecutive year that CERS and KRS pension and insurance portfolio returns have neared or exceeded 10%. Investment returns, General Fund appropriations authorized by the Legislature, and employer contributions boosted total assets in the systems operated by KPPA increased to a record $26.9 billion in Fiscal Year (FY) 2024, an increase of $3 billion in the year since June 30, 2023.
“Our disciplined investment strategy and focus on diversification continue to produce strong risk adjusted performance for the systems and participants,” said Steve Willer, KPPA Chief Investment Officer.
Over 10-, 20-, and 30-year periods, all system pension and insurance portfolio returns exceed their actuarial assumed rates of return, and either nearly meet or exceed their benchmarks.
Considering the level of risk in each portfolio, all system pension and insurance portfolios are in the top 10% of peer public pension funds in terms of Sharpe ratio over the most recent five-year period, according to KPPA.
The Kentucky League of Cities Board of Directors voted to continue to monitor the independence and administration of the CERS to ensure the local pension system continues to operate efficiently and in the best interest of employers and members.
