October 2, 2008 -- Donna Mueller, CEO of the Iowa Public Retirement System (IPERS) says IPERS benefits are safe regardless of what has been happening in the stock market and at the federal level.  "IPERS is a retirement plan that uses a formula to set your benefits.  The stock market does not change the formula.  We can and will continue to pay all the benefits we have promised," Mueller stated.

In a statement released by CEO Mueller, she said that even after failure to pass the bill aimed at stabilizing financial markets, a tumble in the value of stock does not change the ability of the fund to pay pensions. IPERS has enough money in cash and bonds that can be easily converted to cash to pay pensions for years.  "We can wait for the markets to correct."

Recent media reports had indicated that IPERS has lost $1 billion.  Most of that loss is on paper and can be made up when the markets recover.  CEO Mueller cited an example of bonds.  "Some of our bonds have market values today that are less than the price we paid for them.  If our investment managers have picked good bonds and those bonds pay off as expected, then the paper loss will be recovered."
 

CEO Mueller went on to say, "Stocks are a different story, but generally, if the company survives this crisis, its stock price will increase and paper losses can be recovered.  Paper losses can become real losses if we have to sell the portfolio--but IPERS does not need to sell.  We have enough cash and short-term assets to pay benefits for many years.  We can be patient and wait for the markets to recover and hopefully erase the paper losses."

IPERS is a long-term investor with a well diversified portfolio and plans for bad years among the good years.  Investment managers intentionally limit the amount they put in any one company.  Because of these investment strategies, the impact of losses in any particular company is lessened.

CEO Mueller added that IPERS is concerned but not panicking.  IPERS knows that returns and market values will decline in these types of markets, but IPERS is in a position to "wait for the storm to pass."

IPERS' one year return as of June 30, 2008, was negative 1.33 percent, but the annualized five-year return as of June 30, 2008, was positive 10.14 percent.

For more information, check www.iowahouse.org