The State Teachers Retirement System (STRS) of Ohio announced on Wednesday that it lost millions by holding more than $27 million in shares of Silicon Valley Bank before the bank’s collapse last week.
Pension fund in Silicon Valley. (Photo: MarketWatch)
Pension Fund
The shares represented only .03% of the total fund, which held over $88.8 billion in assets as of June 2022, the loss highlights the ongoing financial crisis that has impacted pension funds across the United States.
Silicon Valley Bank, the 16th largest bank in the U.S., collapsed last week, followed by the collapse of Signature Bank. Silvergate Bank, which specialized in providing services to cryptocurrency users, also liquidated its assets earlier in March.
The crisis has impacted other pension funds, including North Carolina’s state pension fund and California’s public employee retirement fund, according to a published report in Yahoo News.
In a statement to ABC News’ Raleigh station WTVD, North Carolina Treasurer Dale Folwell said the state’s pension fund held about $9.9 million in Silicon Valley Bank and $7.8 million in Signature Bank stock. Similar to STRS, the limited exposure to North Carolina amounted to only .01% of the total value of the impacted portfolios.
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Pension Fund Losses
The California Public Employees’ Retirement System, which covers 1.5 million people, also revealed it had roughly $67 million in exposure to Silicon Valley Bank and $11 million in exposure to Signature Bank at a board meeting this week. The nation’s largest public pension fund with over $422 billion, CalPERS suffered a relatively small impact from the financial crisis.
In a published article in ABC7, the losses in California, Ohio, and North Carolina represent a fraction of the losses suffered by a Swedish pension fund representing over 2.6 million people that invested over $1.1 billion in Signature and Silicon Valley Bank. Magnus Billing, the CEO of Alecta, told a news outlet that the investments were a “big failure” and that the fund would likely write off their holdings as a loss.
STRS stated that the collective actions taken by the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation to insure and backstop deposits have helped to mitigate the situation facing the banking industry. However, they continue to monitor and assess the impact of these developments. The losses suffered by pension funds highlight the importance of diversified investments and careful risk management.
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