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New Retirement Counseling Classes for General members
| Wednesday, February 17 (2:00-4:30 PM) | HR Training Center |
| Tuesday, March 2 (2:00-4:30 PM) | HR Training Center |
| Tuesday, March 9 (2:00-4:30 PM) | HR Training Center |
SCERA Fact Sheet and Educational Information on Public Pension Systems (posted 08-14-2009)
The Financial Market and Your Sonoma County Retirement
With the market downturn of 2008 and early 2009 we received some questions from members regarding the security of their retirement benefit in the Sonoma County Employees’ Retirement Association (SCERA). Your SCERA retirement benefit is secure as it is based on a set formula (age at retirement, years of service and highest one-year compensation) and has protections in the California State Constitution and County Employees Retirement Law. While investment performance is important in supporting the Plan’s funding, including ad-hoc Cost of Living Adjustments (COLAs), it does not have a direct impact on the amount of your retirement benefit. Retirement benefits are set based on plan formulas and Board-approved COLAs.
The recent market downturn impacts SCERA returns in the short-term, but SCERA employs a thoughtful long-term investment strategy that is set to meet the funding requirements of the Plan. The SCERA portfolio is invested in a well diversified mix of investment classes including categories within stocks (equities), bonds (fixed income) and commercial real estate. Over SCERA’s history we have experienced a number of significant up and down market cycles and this is likely to continue in the future. SCERA’s investment strategy does not change with short-term market movements. The investment strategy has a long-term time horizon and the portfolio is well-positioned to take advantage of a return to more normal market conditions.
The following graph was prepared by our investment consultant, Ennis Knupp, to highlight the annual returns for the U.S. stock market from 1926 through September- 2009. You will note the significant variation in annual returns as the economy and stock markets go through periodic cycles. Over longer periods, however, stocks have provided solid returns superior to those of other investment classes.
Most are aware the stock market experienced a significant downturn in 2008 and early 2009 and the economy entered a recession. The problem began in the summer of 2007 with rising subprime mortgage defaults and evolved into a widespread “credit crunch” with financial institutions less willing to lend to consumers and businesses. This shrinking of credit put upward pressure on interest rates which, in turn, acted like a brake on the economy. Stock market returns suffered as they reflected investor expectations for the businesses impacted by the slowing economy. Through the third quarter of 2009, the market has recovered some of its previous losses as signs of a return to economic growth are expected.
As you observe the markets, keep in mind that the Plan continues to be well funded. SCERA, aware of the market environment, diligently monitors the portfolio and maintains a prudent investment strategy that has proven itself over the long-term. This is evidenced by SCERA’s investment return, net of fees, as of the most recent quarter-end, was 9.1% annualized over the past 30 years.
ATTENTION: ALL SAFETY AND DISTRICT ATTORNEY RETIREESPlease review the attached letter for possible eligibility for tax reduction for health insurance premiums deducted from SCERA benefit payments. |