The state's Employees' Retirement System investment portfolio sank by more than a half-billion dollars during the first three months of the year as stock markets tumbled.

As of March 31, the value of the state's largest pension plan was $8.12 billion — $556.1 million less than at the start of the year.

The portfolio's 6 percent quarterly decline was in line with the downturn experienced by similarly sized public pension funds nationally, according to ERS adviser Pension Consulting Alliance Inc.

The ERS pays out benefits to more than 35,000 state and county retirees and their survivors and beneficiaries. In addition, there are about 66,000 state and county workers who have not yet retired but will eventually be drawing an ERS pension.

Even with the decline in portfolio value, the ERS continues to have more than enough for payments to current beneficiaries.

THINGS LOOKING UP

The report had better news when it came to the portfolio over a five-year period, during which it outperformed peers, said Neil Rue, Pension Consulting Alliance managing director.

This marked "good relative performance in the midst of a lot of bad news," said Rue, who also said the current quarter's performance may show an improvement because of a recent stock market upturn.

Moreover, he said treasury bond investors are anticipating an economic recovery later in the year. That would be a welcome change for the ERS portfolio, which has declined for six consecutive quarters.

Rod June, ERS chief investment officer, said the pension plan has begun to move some of its money out of bonds and other fixed-income investments into stocks. That will position the portfolio for better gains once a recovery starts.

"We're working toward that," June said, noting that he had already moved $50 million into stocks and would continue shifting more money to those investments over the next several months.

Pension Consulting also reported: