Aggressive Tactics Boost Pension Plan.

• Author: Raabe, Steve

Colorado's $31 billion state retirement portfolio has a larger proportion of its money in common stocks than any other U.S. public pension fund.

For 27 years, teacher Susan Christensen has worried far more about her third-graders at North Stair Elementary in Thornton than about her state-sponsored retirement plan.

Fortunately for Christensen, she's had little reason worry about whether her retirement check will bounce. Her pension plan, the Public Employees' Retirement Association of Colorado, has become one of the best-performing public retirement organizations in the business.

"Until I started getting close to retirement, I never paid much attention to it," Christensen said. "I just put my trust hi them and said, 'Here's my money.'"

So far, Christensen's trust has been well placed.

PERA has adopted an unusually aggressive money management style to produce an eye-catching rate of return fox its 297,000 members--employees and retirees of school districts, cities and state government agencies. The $31 billion state retirement portfolio has a larger proportion of its money in common stocks than any other U.S. public pension fund.

Despite its greater exposure to the volatility of stock market swings PERA has kept losses to a minimum and capitalized on market gains to earn far more money than it disburses in benefits. The strong performance has resulted in, higher payouts to retirees and less of a burden to state taxpayers, who fund a portion of the retirement benefits.

And in building its portfolio, PERA has attained a stature in the pension plan industry that has led retirement plans in other states, large and small, to copy Colorado's successful approach.

"We used PERA to get help on how to structure our funds," said Phil Archibeck, state investment officer for the New Mexico State Investment Council.

Archibeck said he has long been an admirer of the style of Norman Benedict, PERA's deputy executive director of investments, who helped create the strategy that pushed PERA to the top of the performance rankings.

"He's been a little more aggressive than you'd normally find in this business," Archibeck said of Benedict. "More people should be oriented to where he is. There's more risk and volatility, but in the long run you're going to get a lot better return.

"His performance has been exemplary," Archibeck said.

MUTUAL FUND-LIKE RETURNS

Statistically, PERA's performance has more resembled the handsome returns of a mutual fund than the stodgy...