Did NHRS Pension Fund Investments Really Do That Badly in 2012?

Recently the New Hampshire Retirement System (NHRS) released its preliminary investment return figures for Fiscal Year 2012. Over the fiscal year, the NHRS saw .7% return on pension fund, falling well short of the assumed rate of return of 7.75%. While this shortfall will lead to a decline in the funding ratio, it is important to remember that pension funds do not function on a year to year basis. One really good year, or one really bad year does not mean that a system is healthy or sickly respectively.  Nor does the NHRS operate in a bubble, independent of global economic conditions.

The chart below shows a comparison of how the returns of the NHRS stand in relation to a handful of other state retirement systems that have reported preliminary figures so far. More or less, the NHRS’s returns were average when stacked against similar systems.

The research firm Wilshire Associates calculated the median gain to state and local pension funds for fiscal year 2012 at 1.15%, so though New Hampshire’s return was lower than the median, it was only by 0.4%.

So did the NHRS do badly this past year? While the system did poorly in terms of meeting the assumed rate of return for the year, comparatively speaking, the NHRS was firmly in the middle of the pack.