By STEPHEN LLEWELLYN

New Brunswick's 49,000 teachers, judges and civil servants can breathe a sigh of relief because their pension fund is back in the black.

But that doesn't mean the Liberal government's $749-million deficit will be any smaller this year.

John Sinclair, president and CEO of the New Brunswick Investment Management Corp., said Monday the three public service pension funds each earned a return of about 20 per cent in 2009-10.

That's a major improvement from 2008-09, when the pension funds lost $1.7 billion, or just over 18 per cent, in the global stock market meltdown.

Sinclair said the annualized four-year return for the three funds is 1.77 per cent and since the inception of the New Brunswick Investment Management Corp. in 1996, the return is 6.5 per cent.

"Most importantly our annualized real return (after adjusting for inflation) since inception is 4.46 per cent, exceeding the target of four per cent set by the actuary," he said in a media release.

"These returns have been achieved in spite of the adverse effects of the prior year's global financial crisis."

Sinclair said unlike some pension funds, the corporation wasn't forced to sell holdings during the downturn to meet obligations to pensioners.

He also said there were only minor changes in the corporation's investment strategy and holdings.

In other words, he said, the New Brunswick Investment Management Corp. didn't sell at the bottom of the market.

"By maintaining our long-term investment strategy, and not having to liquidate investments during last year's downturn, we were positioned to participate in the very impressive rebound in global financial markets," said Sinclair.

The corporation's net assets under management as of March 31 were $8.341 billion, up from $7.029 billion as of March 31, 2009.

The increase in net assets under management resulted from $1.384 billion in net investment valuation gains, plus $150 million in special funding payments from the province, less net pension payouts of $223 million.

The overall gross rate of return for the three funds was 19.94 per cent.

Each of the three funds is structured differently.

The teachers' fund earned 19.99 per cent, the judges' fund earned 19.89 per cent and the public-service fund earned 19.9 per cent.

"Defined benefit pension plans derive a significant portion of their ultimate pension payments from investment returns," said Sinclair.

"Achieving these returns requires an investment strategy capable of delivering the required return as set by the pension fund actuary with minimum amount of risk."

He said the corporation recognizes that a primary concern of pension plan members is the safety of their future pension payments.

Finance Minister Greg Byrne said the returns for the three pension plans are good news and the corporation should be commended.

"Initially, there was a $300-million shortfall on the books that has since been reduced down by $100 million," he said.

"If the funds continue to show strong improvement, certainly it is positive news for the province."

But Byrne said the good pension returns won't reduce the province's projected $749-million deficit this year.

Posted June 01 2010, Source ,