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Minneapolis (AP)

Economy affects Minn. pension funds

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The troubled U.S. economy and Wall Street's recent woes are bringing a dose of good news-bad news to Minnesota public employees invested in the state's pension fund.

The good news: Wall Street's recent troubles won't hurt pension investments.

The bad news: The country's overall economic troubles have already hurt the value of the state's largest pension - the Minnesota Teachers Retirement Association pension fund.

Officials say that as of June 30, the end of fiscal 2008, the fair market value of the fund, also called TRA, was down 5 percent from the previous year. So starting next July, public employees may have to contribute more to their pensions.

John Wicklund, assistant executive director of TRA, said a status report is scheduled to be presented to the Legislative Commission on Pensions & Retirement in December. Because TRA's pension fund value sank by 5 percent, "it will have a negative impact and boost the amount of contribution rates from employees," he said.

TRA is the largest of three big state pension funds making up the Minnesota Public Board of Investment, which controls $63 billion in assets.

Currently, TRA members must put 5.5 percent of their paychecks toward retirement. TRA's pension fund targets an 8.5 percent return to guarantee that all members receive all pension payments after retirement, Wicklund said.

After submitting the report to the Legislative Commission on Pensions & Retirement, actuarial reports from the three major state pension funds will go to lawmakers during the 2009 session. Then, legislators will figure out the contribution rate for members of TRA, the Public Employees Retirement Association of Minnesota and the Minnesota State Retirement System.

When it comes to Wall Street's troubles, State Auditor Rebecca Otto said the three pension fund groups had no exposure to any Lehman Brothers assets, so they won't be affected by that firm's recent Chapter 11 bankruptcy filing.

"We take a long-term perspective, and we do it as a family, too," Otto said. "Markets go up and markets go down."

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Information from: Finance and Commerce, http://www.finance-commerce.com