Fiscal Year 2023 in Review


Fiscal Year 2023 in Review

The Connecticut Retirement Plans and Trust Funds (“CRPTF”) delivered an annual total return of 8.5 percent, net of all fees and expenses, for the fiscal year ending June 30, 2023. The three largest pension plans, the Teachers’ Retirement Fund (TERF), State Employees’ Retirement Fund (SERF) and Connecticut Municipal Employees’ Retirement Fund (CMERF), which together represent about 90 percent of total assets, returned 8.35 percent, 9.02 percent and 8.22 percent, respectively. For the longer-term period of ten years, ending June 30, 2023, TERF and SERF generated net investment results of 6.94 percent and 7.04 percent, outpacing the plans’ composite benchmark returns of 6.91 and 6.92 percent, respectively.

Following unprecedented volatility resulting from rising inflation and federal reserve’s efforts to tame inflation expectations through series of interest hikes during 2022, CRPTF asset classes performance results were favorable.  The Global Equity (Domestic, Developed and Emerging Equity), Non-Core Fixed Income and Emerging Markets Debt portfolio – delivered the strongest investment performance during fiscal year 2023. For the year ended June 30, 2023, returns were: Domestic Equity, 19.83 percent, Developed Markets Equity, 20.28, Emerging Market Equity, 6.20, while the Non-Core Fixed Income and Emerging Markets Debt investments returned 9.82 and 9.12 percent, respectively. The market value of total assets as of June 30, 2023, was $49.5 billion.

Over the course of the fiscal year, the CRPTF made $11.9 billion in new investment commitments. Approximately $4.1 billion in new commitments were in private market investments, with $1.5 billion in private equity, $1.3 billion in private credit, $400 million in real estate and $900 million in infrastructure and natural resources. In the public markets, the CRPTF invested $7.8 billion across the various public asset classes. The Connecticut Inclusive Investment Initiative (Ci3) (formerly The Connecticut Horizon Program) is comprised of Ci3 Manager-of-Managers partners who oversee sub-managers approximating $2 billion at June 30, 2023. The invested capital with the emerging and diverse investment managers totaled $1.4 billion across the various public asset classes, and nearly $700 million for the private asset classes.

In September and December of 2022, following the release of the State’s financial statements for Fiscal Year 2022, the Treasurer’s office directed contributions in the excess combined Budget Reserve Fund (BRF) amount of $4.1 billion, allocating $903.6 million to TERF and $3.20 billion to SERF. The growth of the State’s BRF allowed the State to responsibly pay down long-term unfunded pension liabilities.

At the end of Fiscal Year 2023, Connecticut held another historically high BRF balance and provided nearly $1.9 billion in excess contributions to pay down the State’s long-term unfunded pension liabilities, $1.05 billion to State Employees’ Retirement System (SERS) and $828 million to Teachers’ Retirement System (TERS).