A public pension fund that provides retirement, disability and survivor benefits for state employees, retirees and their families in Missouri generated a return of 14.3 percent for the fiscal year ended June 30, 2010.

The Missouri State Employees’ Retirement Systems portfolio — with total assets of around $7 billion — generated $887 million on behalf of its members and taxpayers, according to results released Monday.

The S&P 500, a popular benchmark for stocks, returned 14.4 percent during the same period. The Barclays Capital Aggregate Bond Index, a benchmark for bonds, returned 9.5 percent. MOSERS, meanwhile, uses a policy benchmark reflective of its asset allocation mix, which returned 13.4 percent, according to Christine Rackers, a spokesperson for the pension fund.

MOSERS’ Board of Trustees established 8.5 percent as the return rate to be used in the actuary’s valuations. During the fiscal year the state contributed $280 million and the investment earnings contributed $887 million, Rackers told Missouri Watchdog.

The funding for MOSERS is both from investment earnings and state contributions, Rackers said, adding that more than 54 percent of the total funding for the pension fund comes from investment earnings.

The contribution rate for the state this fiscal year is 13.8 percent. “The contribution rate determined by the actuaries and established by the board each year has been fully funded by the state,” Rackers said.

Since inception in 1981, MOSERS’ investment return is 10.3 percent, Rackers added.

“What is important to taxpayers is that MOSERS generates revenues that lower the demand for state resources,” said Gary Findlay, executive director, in a prepared statement, noting the fund’s staff generated returns in excess of the policy benchmark. “The staff generated $49 million in excess performance this fiscal year.”

Performance across the fund’s assett classes varied during the year with emerging market equities generating a return of 22.8 percent, public equity returning 14.3 percent, and public debt returning 14.8 percent.

“These results demonstrate that the MOSERS portfolio was prudently diversified and properly positioned to take advantage of the market rebound that occurred during the first three quarters of the fiscal year and provided significant downside protection during the last quarter,” said Rick Dahl, chief investment officer, in a statement.

The fund’s Comprehensive Annual Financial Report for the fiscal year 2009 is available online. The audited report for fiscal year 2010 is expected to be available by the end of November or December.

By Brian R. Hook, brhook@missouriwatchdog.org, (314) 482-7944