Officials of several statewide retirement systems told legislators recently that, despite well-diversified portfolios, their investments lost value.
Actuaries for the systems also said they are confident that the market will recover before serious problems occur.
The recent losses will not have an immediate effect on systems because of a time delay, said Gary Curran, actuary for several of the systems. Systems’ financial valuations lag by a year and the majority of the poor investment period will not enter calculations until 2010, he said.
Also helping systems is a “smoothing” method by which valuations are averaged over a certain number of years — four or five for most statewide systems — so the ups and downs of the market do not directly disrupt systems, Curran said.
When retirement systems do finally figure in losses, some will likely have to increase employer contributions to make up the difference, Curran said. Potential increases depend on the age of members in the system, he said. If there are more people contributing than drawing benefits, employers will have a smaller hole to fill, Curran said.