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Fiscal Year 2008 — A Financial Snapshot for Members

Here are a few highlights of operations and finances for fiscal year 2008. For more detail, please see our Comprehensive Annual Financial Report (CAFR) available at www.kpers.org or by calling 1-888-275-5737.

Benefits

In total, the Retirement System paid just over $1 billion in benefits during the fiscal year.

  • Retirement, $946 million
  • Withdrawal, $48.5 million
  • Retiree death, $8.3 million
  • Death/disability, $56.7 million

Investment Performance

In a difficult investment environment, KPERS’ portfolio returned -4.4 percent for the fiscal year ended June 30, 2008. Since then, negative returns have been especially extreme. Equity markets have been down substantially, including the S&P 500 with a -28.5 percent return through December 2008. Reflecting market turmoil, KPERS’ portfolio returned -23.5 percent during this same period. Historically, markets have recovered and this should help offset some of the current losses.

KPERS assumes a long-term investment average of 8 percent. In some years, returns will be below that rate, and in others, returns will exceed it. Even with varying rates of return over the last 25 years, System assets have continued to grow.

For information about KPERS’ diversified and disciplined investment strategy, please see the Investment Section in our CAFR.

  

Finances

Net assets decreased by $990 million or 7 percent.

  Plan Net Assets

Cash and Deposits
$406,994
Receivables
73,234,185
Net Investments
13,114,564,864
Capital Assets/Supplies
6,668,232
Payables
(1,810,360)
Net Assets
$13,193,063,915

  Changes in Plan Net Assets

Additions
Contributions
$727,755,738
Net Investment Loss
(649,102,982)
Misc Income
225,736
Total Additions
78,878,492
Subtractions
Benefits
(1,059,284,413)
Administrative expenses
(9,603,126)
Total Subtractions
(1,068,887,539)
Net Decrease
(990,009,047)
Net Assets:
Beginning of Year
$14,183,072,962
End of Year
$13,193,063,915

 

Funding

As of December 31, 2007, our most recent valuation, KPERS’ overall funded ratio was 70.8 percent. The funded ratio is the ratio of actuarial assets to liabilities. The System’s unfunded actuarial liability (UAL) increased from $5.36 billion to $5.55 billion.

The unfunded actuarial liability (UAL) is the gap between the actuarial value of assets and the actuarial liability for service already earned. Since that valuation, we have seen the worst year for the stock market since 1931, yielding unprecedented negative returns. Even with a strong, sustained market recovery, the UAL will significantly increase going forward and the funded ratio will fall.

As we work with the Governor and Legislature over the coming years to address this funding shortfall, members need to remember that benefits are safe and KPERS has billions of dollars to pay benefits for years.


Return to KPERS Papers 2009 – Volume 1