Oregon’s investment officials reviewed the performance of funds supporting public employee pensions and workers’ compensation coverage October 21, reporting that a pension diversification portfolio met its annual investment target while the State Accident Insurance Fund exceeded its benchmarks across four reporting periods.
The Oregon Investment Council’s review follows a September decision to change how the state allocates approximately $104 billion in pension investments. The council is also examining the standards used to evaluate investment managers and measure results across different types of assets.
The Oregon Public Employees Retirement Fund’s Diversifying Strategies portfolio returned 8.3% during the year ending August 31, matching its benchmark. Over three years, it generated an annualized return of 7.5%, exceeding its benchmark by 0.3 percentage points. Its five-year annualized return reached 8.8%, surpassing its benchmark by 3.6 percentage points.
SAIF’s investment portfolio, valued at $4.6 billion on June 30, exceeded its benchmarks over one, three, five and 10 years. Its investment objectives emphasize preserving capital and producing stable returns while maintaining money available to meet payment obligations.
The workers’ compensation insurer is also distributing a $50 million dividend to eligible Oregon policyholders in October, returning money to employers whose policy terms ended in 2025. The payment was declared September 2 and represents approximately 8.4% of eligible premiums.
A total of 50,138 policyholders qualified for the distribution, SAIF’s 17th consecutive policyholder dividend. Favorable development of earlier claims reserves helped support the payment, reflecting continued declines in claim frequency and other factors. SAIF also considered rising medical costs, uncertainty surrounding investments and future capital requirements when determining the amount.
The insurer evaluates sustained changes in expected losses, operating expenses and investment earnings when considering lower prices. Its dividend distributes money to qualifying policyholders based on prior coverage, while future pricing depends on the financial conditions supporting ongoing insurance operations.
For Oregon’s public pension system, the October investment review comes as Treasury prepares to implement new allocation targets adopted September 2 following a multiyear study of assets, financial obligations and investment risk.
The council set targets of 26% for publicly traded equities, 20% for fixed income and 19% for private equity. Real estate and real assets each received a 10% target. Diversifying Strategies and a newly established separate credit allocation each received 7.5%.
The credit allocation will draw investments from the existing fixed-income and opportunity portfolios. Treasury expects the broader transition and portfolio rebalancing to occur over several years, with investment policy updates reflecting the new targets and allocation ranges scheduled for completion by early 2027.
The adopted allocation carries a projected annual return of 7.3%, above the pension system’s assumed rate of 6.9%.
The overall retirement fund returned 8.6% during the year ending June 30, with positive results across all asset classes. During the final quarter of that period, it earned 3.5%, trailing its policy benchmark by 0.6 percentage points.
Investment earnings are the largest source of funding for the Oregon Public Employees Retirement System, which also receives employer and member contributions. Treasury manages the retirement fund under the Investment Council’s direction.
External investment consultant Aon reviewed the fund’s benchmarking framework during the October meeting, identifying limitations in evaluating private equity against the Russell 3000 stock index plus three percentage points. The review addressed the difficulty of assessing investments with long holding periods through monthly or one-year comparisons.
The council received the analysis as part of its work following the allocation changes. Treasury did not report adoption of a replacement private-equity benchmark.
The six-member Investment Council establishes investment policy for the pension fund and other state investment funds. Its next meeting is scheduled for December 2.