OPA: Covid affects Guam Retirement Fund's investments and net position

The Guam Retirement Fund has determined that the Covid-19 pandemic is expected to negatively impact its investments and net position, although the ultimate financial impact cannot be reasonably estimated at this time, according to Office of Public Accountability.

"The Covid-19 pandemic caused unprecedented volatilities in the financial markets. While periods of extreme market volatility can be alarming, the Fund stayed focused on the long-term investment horizon and prudently managed investments in both the DB and DC Plans," according to the Office of Public Accountability.

In an audit released March 1, OPA reported that the Fund closed fiscal year 2020 with a $17.8 million decrease in net position for the Defined Benefit plan, and a $41.8 million significant increase in net position (net income) for the Defined Contribution (DC) plan. The Fund’s rate of return on its DB Plan investment portfolio was 4.33% in FY 2020 compared to 3.17% in FY 2019, resulting in an average rate of 8.02% since 1995.

Independent auditors Burger & Comer P.C. rendered an unmodified or “clean” opinion on the Fund’s financial statements. FY 2020 is the 15th consecutive year that the Fund’s Report on Compliance and Internal Control contained neither material weaknesses nor significant deficiencies. The Fund also did not receive any Management Letter comments.

For FY 2020, OPA deemed the Fund equivalent to a “low-risk auditee” for three consecutive years because of the Fund’s accomplishments and issuing their financial audits by March 31 (with FY 2019 being the exception ).

The DC Plan net position increased by $41.8 million or 12% from $357.9 million in FY 2019 to $399.6M in FY 2020. Due to market fluctuations, the net appreciation in fair value of investments increased by $43M from $(29.9M) in FY 2019 to $13M in FY 2020. Interest dividends and other investment income decreased by $18.4M from $37.8M in FY 2019 to $19.4M in FY 2020. This was due to the market fluctuations and changes in the participants’ investments choices. Refunds totaled $21.7M in FY 2020, a 22.8% decrease from $28.1M in FY 2019.