Has the FRS Pension Plan Trust Fund been impacted by the subprime mortgage crisis?
The FRS Pension Plan Trust has been minimally impacted by the mortgage crisis. In a portfolio of $112 billion and about 14,000 securities, it is natural that from time to time some bond and money market securities will be downgraded below the credit quality requirements for purchase. In those cases, investment managers must make prudent and diligent decisions regarding how to manage such securities. Currently, commercial paper downgraded below the FRS Pension Plan purchase requirements represent about one-half of 1% of total assets. Pension Plan members should feel comfortable that their retirement benefits are safe since these benefits are guaranteed under Florida law and are not dependant on investment results. The FRS Pension Plan also has one of the largest surpluses of any state retirement system. The State Board of Administration of Florida has an outstanding record of delivering high returns at a level of risk reasonable for a defined benefit trust fund.
