TALLAHASSEE — Florida's State Board of Administration said Wednesday that it beat its investment objectives last year, with its giant pension fund leading the way.
Rebounding from the recession, the pension fund gained $9.8 billion after payment of benefits and was worth $109.3 billion in the year ended June 2010.
Before benefits, the pension fund's gain was 14.03 percent — well ahead of its earnings target, the SBA said in its annual report released Wednesday.
"The SBA has a history of cumulatively producing required returns since the fund's inception," said Ashbel C. Williams Jr., the SBA's executive director and chief investment officer. "Over the past 22 years, more than 66 percent of pension plan benefit payments have been funded by investment gains, not from taxpayers."
The SBA's investment performance came under fire during the recent election season. Republican Gov.-elect Rick Scott accused his Democratic rival, Chief Financial Officer Alex Sink, of poor oversight of the SBA, which is governed by a three-member board that includes the governor, the CFO and the attorney general.
The SBA's risky investment practices came under scrutiny after a New York City real estate deal cost the fund $266 million. The St. Petersburg Times also documented that the pension fund kept quiet about hefty commissions going to middlemen. The pension paid $180 million in fees as part of a long-running private equity deal, but got little in return. What's more, the SBA had to cope with an investment debacle involving billions in mortgage-backed securities that plummeted in value.
Despite the recent investment gains, Florida's pension system, the fourth-largest in the United States, still can afford to cover only 87.9 percent of its benefit obligation to 1 million current and future retirees.
The SBA said Florida is doing better than most state pension funds. "Since June 30, 2010, the pension fund value has grown an additional $9 billion to over $118 billion, after approximately $1.5 billion being paid to retirees," Williams said.