Florida pension fund ‘solid’ in the face of market volatility

TALAHASSEE — Florida’s pension fund remains “strong” despite mounting pressure from global market conditions, Lamar Taylor, acting executive director of the State Board of Administration, said Wednesday.

Overseeing about $250 billion in assets, the board invests money from the Florida Retirement System, along with 25 other funds, and manages the Florida Hurricane Catastrophe Fund.

Taylor, in a brief conference call with Governor Ron DeSantis, Attorney General Ashley Moody and Chief Financial Officer Jimmy Patronis, said overall assets under management by the board were down 6.25% since the beginning of the current fiscal year, which will end on June 30.

The pension fund lost $18.8 billion.

Although part of the decline is the result of $600 million per month in benefit payments, economic conditions, including inflation, are a major factor.

“What’s driving this performance is a significant repricing of risk in the public market,” Taylor said.

In an environment of rising interest rates and inflation, Taylor said it was important to maintain exposure through “real assets”, such as real estate, commodities, infrastructure and energy. DeSantis, Moody and Patronis, seated in their roles as the state’s board of directors, said little throughout the 15-minute call.

Asked after the call about the state of the pension fund, Taylor said: “We don’t know there’s going to be a recession, but there’s definitely some pressure in the market as the market revalues, depending of these higher interest rates.”

When asked if state employees should be concerned, Taylor replied, “You have nothing to worry about.” He described the fund as “solid” and said the state is investing for the long term.

“Last year we had almost 30% return,” he said. “Of course, we knew that wasn’t going to be what you would see from year to year. So we’re planning for volatility, and we’re planning for that in our asset allocation. I think we’re in good shape.”

Dolores W. Simon