Concerns over RSA's performance

MONTGOMERY, AL (WSFA) - A recent survey by State Street Analytics, a finance and investment firm, the Teachers Retirement System, run by the Retirement Systems of Alabama is underperforming.

The RSA is the primary lender to Raycom Media which owns WSFA.

Based on the data, Alabama's performance is below the median of that of other funds.

The national median is 2.15% return on investment. The TRS, for the fiscal year ending in September, performed at a 1.81% rate of return.

Officials with the RSA defended the performance of the fund. They said the volatility and underperformance of international markets is to blame.

"That didn't help our returns but we think there is a bull-case scenario building out there" said Marc Green, Chief Investment Officer at RSA. "Evaluations are very cheap and we like being overweight stocks currently so we're sticking with that."

On Thursday Governor Robert Bentley weighed in on the TRS when interviewed at the governor's mansion saying, "I am concerned that it's not performing to the level that I would like to see it perform."

There was a proposal during the 2011 legislative session to restructure the make-up of the TRS board and the Employees Retirement System Board but it never made it to the Senate floor for a vote. A change in leadership could potentially lead to a diversion of funds or perhaps a different investment strategy for funds administered by the RSA.

RSA executives however say there is nothing wrong with the multi-billion dollar operation. They say all pensions are still fully-funded.

Bill Kelley, who works in investments with the RSA, said "There's clearly sufficient money to pay the benefits that we are currently obligated to pay and if we stay on track like we are right now there's absolutely no problem looking out into the future."

According to additional data in the study by State Street, the TRS is on pace to continue to underperform over the next ten years. The data reflects that the TRS will remain a few points below the median return on investment for the other 63 funds of similar size across the country.

The state's newly appointed Finance Director Marquita Davis told a reporter with "Those aren't acceptable returns. To be dead last as a trend for 10 years or close to dead last is at least something we should have discussions about."

Kelley with the refutes that claim saying, "Our system has always been funded at the rate that our actuaries have said was necessary and so looking out for the long term there's absolutely no reason to have any concern."

The state is set to supply the RSA with more than $600 million to fund the TRS for the 2012 fiscal year.

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