PIERRE, S.D. (KELO) — The South Dakota Retirement System finished the 2022 fiscal year on June 30 with investments worth $14.113 billion. That was down $506 million from the 2021 finish of $14.6 billion.

That sounds like the trustees who govern South Dakota’s public pension plan received bad news. They did. SDRS investments lost 0.6% in value, when the trustees’ policy calls for an average annual gain of 6.5%.

The silver lining, however, was that SDRS finished 12.33% ahead of the benchmark for comparable plans. That was the best ever.

In other words, by having less at risk than others did when the equity and bond markets turned south, and by having much more than usual in cash, SDRS came out relatively ahead.

SDRS gave a 3.5% bump, the most its cost of living allowance policy allows, to retirees and other beneficiaries on July 1 as they dealt with the surge of inflation.

What will the latest numbers mean next July 1, when the next round of benefit increases take effect? Doug Fiddler, the SDRS chief actuary, told trustees Thursday the next raise will be in the range of 2% to 2.1%.

Fiddler said he doesn’t know of any public pension plan that can match inflation for the current year, which he expects to be around 9%. He noted “a distinct turn” on inflation occurred in January 2021 and he isn’t yet convinced the Federal Reserve is serious about reining inflation back.

Fiddler’s remarks followed the year-end performance report presented by Tammy Otten, an assistant state investment officer.

Otten said SDRS investments rose more than 20% last year but still underperformed the benchmark by 5.9%.

“This year,” she told the trustees, “almost every piston worked. It was a really phenomenal year for that.”

During the past decade, SDRS out-performed the benchmark six times and under-performed four times, according to Otten.

Looking ahead, state investment officer Matt Clark said the markets remain overvalued, there is “a huge inflation problem” and retirees face the pain of not keeping up.

There’s no immediate help. “We’re guessing we’re around flat for the fiscal year to date,” Clark said about where SDRS investments stand two months into the current fiscal year.

“Volatility is our hope to make some money over the next decade so that we can actually come out okay,” Clark told trustees. He said SDRS stocks such as oil came back in the past two years and that helped fuel the turnaround.

Clark said he gave special exceptions to investment council staff to buy more of cheap stocks and to hold it longer. “Well, that’s played out now,” he said. His hope is to find others that are under-valued, but he didn’t sound optimistic.

“The cupboards are really bare now,” Clark said.