The coronavirus pandemic has had a serious impact on financial markets around the world. Many U.S. families have lost savings.
The Teachers’ Retirement System is in a better position than many to weather the storm thanks to a careful investment strategy by the TRS Board of Trustees, including three UFT teacher members, to manage risk in its pension funds and the Tax Deferred Annuity Passport Funds.
Although no one could have anticipated the current crisis, the TRS Board of Trustees has overseen the funds during previous market downturns and has, in collaboration with its advisers and the New York City Comptroller’s Office, structured the funds with the understanding that the portfolios need to not only provide income and/or capital appreciation over time but also come safely through market declines.
As a result of prudent diversification and liquidity management, TRS anticipates no difficulty in meeting its benefit commitments to current and future retirees as a result of the coronavirus crisis.
Diversification of risk is perhaps the most important step the TRS Board of Trustees has taken to manage the risk of market downturns. The pension fund’s investments are allocated among virtually every asset class, both public and private, including public equities, corporate bonds, U.S. government bonds, private real estate, private equity and infrastructure. While this diversification does not fully insulate the pension fund from the impact of the current decline in global equities, it does mitigate the losses and helps the fund maintain its focus on its long-term investment horizon.
The board and its advisers continue to review the pension fund’s asset allocation as well as its investment managers’ actions to ensure the fund’s long-term prosperity.
Similarly, the TDA Passport Funds offer TRS members the opportunity to diversify their individually directed 403(b) accounts. The Passport Funds offer participants a choice of U.S. equities, non-U.S. equities, short-term fixed income investments and balanced portfolio fund options. As with the pension fund, the Passport Funds are invested in both active and indexed strategies, including a fund option focused on environmental, social and governance factors. TRS members determine their own risk tolerance and investment horizon and diversify their accounts accordingly.
We know this is a difficult period in which to be an investor. But the TRS Board is committed to its mission of providing secure and sustainable pensions to our members and beneficiaries now and in the future.
This column is compiled by Tom Brown, David Kazansky and Debra Penny, teacher-members of the NYC Teachers’ Retirement Board.
|The unit value is computed during the latter part of each month.|
|U.S. Equity Index||9.88||8.990||9.135|
|International Equity Index||9.554||8.872||8.914|
|visit www.uft.org/pension or www.trsnyc.org.|