My local paper has now reported the losses in the Alaska state retirement system from cratering asset-backed securities. This is a relatively small amount in a single fund, but I expect there are considerable losses in pension funds around the country...
State agency yanks investment
RETIREMENT FUND: Loss of $6 million prompts board to take action.
adn.com
By ELIZABETH BLUEMINK
ebluemink@adn.com
Published: August 30, 2007
Last Modified: August 30, 2007 at 02:27 AM
Alarmed by a severe dip in the value of an investment tucked in about 1,000 state workers' retirement portfolios, the Alaska Retirement Board has terminated the investment option.
The board lost faith in the fund's managers, said Department of Revenue spokesman Brian Andrews.
The board is consulting with Alaska Department of Law to find out if a legal claim for damages could be filed against the fund's manager, Boston-based State Street Global Advisors, he said.
The total value of state workers' participation in the poorly performing investment -- the Daily Government/Corporate Bond Fund -- dropped about $6 million in value this summer, from $36 million to $30 million, according to the Revenue Department. The performance was more than 20 percent below an index of comparable investments.
This sort of investment option is intended as one of the least risky among the options available in the state's retirement plans, according to the Department of Revenue.
The bulk of the loss occurred this month, Andrews said. The board deleted the investment option on Aug. 24.
"The Department of Law has been involved with this whole process. They are looking at what the damages may or may not be and what liabilities are associated," Andrews said.
The sharp decline in the fund's value may be linked to its investment in mortgage-backed securities, which have been hit hard on Wall Street this month due to the national subprime home loan crisis.
About 1,100 current and former state workers were invested in State Street's bond fund, according to the Department of Revenue.
The impact to workers is that every dollar they had invested in the fund at the beginning of the year has since shrunk to 86 cents, Andrews said.
The ARM board directed that all money invested in State Street's bond fund be transferred to the Barclays Lehman Brothers Government/Credit Bond Index Fund.
The Alaska Permanent Fund -- the state's oil wealth savings account -- has not made any changes in its investments due to the mortgage woes that have rocked the stock market in recent weeks, according to Permanent Fund officials. |
