Balancing Liquidity: What It Means For Your Investments

This article was originally published in the Fall 2025 issue of Bridge Magazine.

For many years now, I’ve written articles dealing with many aspects of the funds and investment program that support the products our members have invested in through Pension Fund. This has included articles on asset allocation, Good Experience and Special Apportionment Credits (GEC/SAC), and non-traditional investments, to name just a few. Although the policies governing our investment operations and portfolios have remained stable, occasional changes occur due to longer-term shifts in the financial markets or changes in our members’ demographics over time. One aspect of our investments that has been slowly changing since I started at Pension Fund over 30 years ago is liquidity. This is something that we have not mentioned before, but it is a significant consideration in our investment program today.

The need for liquidity has become an even more important portfolio consideration, especially within the defined benefit product, where retired members and their beneficiaries depend on and look forward to their well-earned retirement income each month. Our defined benefit pension product is most impacted by liquidity needs because it is by far our largest product, both in asset size and membership. We want to ensure that those pension checks arrive on time each month, in addition to having appropriate funds immediately available for those wishing to make withdrawals from any of our other savings products.

When I first began working at Pension Fund in the early 1990s, there was considerably more pension dues arriving at our office than pension payments being sent out monthly. It was the responsibility of our Treasurer to invest this difference for the future of those members. As you can see from the chart in this article, the monthly pension benefits have been increasing steadily over many years, primarily due to the net increase of retired members with relatively large monthly pension amounts and the associated substantial SACs that have increased those pensions over time. Following the recent approval of the 2025 SAC at 3.5%, the monthly net distribution of pension payments exceeds $12 million each month, or nearly $150 million annually! Clearly, this is a significant amount that needs to be available each month and, along with providing immediate access to funds in other products, is a meaningful variable in managing the availability of liquid investments and cash in our asset allocation positioning for future growth.

As the Pension Fund staff and board work on planning for and anticipating possible future demographic changes in the coming decades, rest assured that we will continue to invest assets in ways that provide growth for the future as well as liquidity needed to meet the obligation we have of providing safe and stable retirement benefits to those of you that have worked so hard in the service of others.