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Defined Benefit Plans and Long-term Investing

Posted 4/28/20 (Tue)

NDPERS has received a number of questions regarding how the recent market declines are affecting our defined benefit retirement systems. The first thing to remember is that a defined benefit retirement system provides a “defined” benefit – that is, the North Dakota Century Code provides a specific formula that we must follow to determine your benefit. The recent market declines do not affect that statutory formula.

You should also keep in mind that we are long-term investors. The State Investment Board, which invests all of the NDPERS monies, professionally manages a highly diversified portfolio of investments on our behalf. We have designed that portfolio to reduce the impact of significant market declines. While we are still experiencing losses in our funds, we expect that over the course of time we will make up those losses and, indeed, return to having gains. That is, of course, the benefit of being long-term investors – we have time to make up these losses. We may not make them up this year, or even next year. But in time we will make them up. In the meantime, please be assured that our investment team and the NDPERS Board are closely monitoring the financial markets and our investment portfolio.