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Monday, July 30, 2012

Maryland's $37 bln. Pension System Earns .36%

 How did your investments perform over the 12 months ended 6/30/2012?

Maryland's $37 billion state retirement and pension system for employees and teachers earned .36% over this period.

Last week CALPERS, the country's largest public pension fund, at $233 billion, reported a return of 1% for the 12-month period ended June 30, 2012.

 Interestingly, a basic indexed portfolio invested 55% in SPY (S&P 500), 15% in VEU (global less U.S.), and 30% in AGG (U.S. investment grade bond market) would have returned 2.6% before fees.

The difference between .36% and 2.6% for the $37 billion Maryland pension fund amounts to $828 million.  That would go a long ways toward paying Maryland teacher pensions.

I have to agree with Jeff Hooke, Chairman of the Maryland Tax Education Foundation, who said the results "look like a minor disaster for fiscal 2011."

Source: Md. pension system earns close to nothing in past year by Len Lazarick


  1. From the Baltimore Sun: "Declining to follow the footsteps of Baltimore County's pension plan, Maryland's state employee retirement system decided Tuesday to leave unchanged its assumption about how much it will earn on investments.

    The 14-member pension board voted 11-1 to keep the rate at 7.75 percent, in the middle of the pack for public retirement plans nationwide."

    7.75% seems a tad higher than .36%. Call me crazy, but they are way too optimistic in their assumptions.

  2. I agree that 7.75% is to high. Another take away for the average investor is that it illustrates the consistent finding that the average person investing in 3 or 4 low cost diversified index funds has a good chance of performing better than 80% of professional investors.

  3. This is nice post which is all about the pension system that pension system earn or not, yes pension system earn according to the govt policies.
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