Scranton’s three pension funds earned nearly $2.5 million on investments so far this year because of the stock market’s strong performance, but the robust performance may not last, the plan’s investment adviser told the composite pension board Wednesday.
Mark Yasenchak of PFM Asset Management said financial advisers largely believe the market will not sustain the current level of growth throughout the entire year.
“Equity markets continue to thrive,” Yasenchak said. “We are somewhat cautious that it’s an overvalued market.”
As of May 1, the police, fire and nonuniform funds showed an investment return of just more than 6 percent and had a market value of $57.8 million. That’s about $1.6 million less than the market value as of the end of 2016, but still far better than the $50.7 million fund balance as of the end of 2015.
Although there is a concern of a downturn in the market, the option of moving more money to fixed income investments is not attractive because those investment returns are low.
“Bonds and money markets are not paying any real dividends,” Yasenchak said.
In other business, city resident Joan Hodowanitz asked the board if the city shared information on when it will make a final decision on how much of the $70 million in sewer sale proceeds received so far will be deposited into the pension funds.
Mayor Bill Courtright revealed a plan in March that earmarks $22.8 million of the sewer money for the funds. Board member Dave Mitchell said the board has not gotten any further information.
“If we had an answer, we’d give it to you,” Mitchell said. “We can’t make the mayor and council do something.”
Contacted after the meeting, city Business Administrator David Bulzoni said officials won’t know the exact amount until they complete an evaluation of how the city should pay down its debt — a high priority for Courtright.
Bulzoni said that is an extremely complex process, but he hopes to have a recommendation for council within the next two weeks.
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