Connecticut allocates an additional $1.6 billion to pension funds

Connecticut Retirement Plans & Trust Funds, Hartford, will receive $1.6 billion in additional contributions next fiscal year due to a state budget surplus.

The additional contributions will bring a total of $3.6 billion to be transferred to pension plans in the fall, according to a May 20 letter from the Office of State Policy and Management to Comptroller Natalie Braswell.

Of that total, $2.7 billion will go to the $22.5 billion state employees’ retirement fund and $903 million to the $16.9 billion teachers’ retirement fund.

The additional contributions are the result of a state budget surplus caused by higher tax revenues in the current fiscal year ending June 30.

Gabriella Martin, spokeswoman for state treasurer Shawn Wooden, who oversees pension plans, said in an email that some surplus goes into the state’s fiscal reserve fund, but if that fund reached 15% of the general appropriations during the same financial year, the excess must be allocated to the two pension systems.

“This year’s budget directed contributions made through the end of FY23 first to SERS, up to 5% of its unfunded liability, next to TRS, up to 5% of its unfunded liabilities, and the rest to SERS,” Ms Martin said. .

“With respect to the question of how specifically the capital will be invested, these excess funds will be invested in accordance with our strategic asset allocation guidelines and investment policy, just like other pension plan funds and Connecticut Trust Funds,” Ms. Martin said. .

The two pension funds share common target allocations of 20% domestic equities; 19% real assets; 13% core fixed income securities; 11% international developed market equities; 10% private investment; 9% emerging market equities; 5% each of emerging market debt and private credit; 3% each of alternative and high yield investments; and 2% liquidity fund.

As of March 31, the actual teacher fund allocation was 22.4% domestic equity; 14.5% real assets; 12.3% international developed market equities; 11.4% core fixed income securities; 11.2% private investment; 10.3% emerging market equities; 5.9% high yield; 4.6% emerging market debt; 3.9% alternative investments; 2% private credit; and 1.5% liquidity fund.

As of March 31, the actual government employee fund allocation was 22.1% domestic equity; 14.4% real assets; 12.2% international equities from developed markets; 11.1% core fixed income securities; 10.8% private investment; 10.2% emerging market equities; 5.8% high yield; 4.5% emerging market debt; 3.8% alternative investments; liquidity funds 3.2%; and 1.9% private credit.

Ms. Martin could not immediately be reached for further information.