Investments
Questions & answers on POMV
WHAT IS POMV?
POMV stands for “percent of market value,” and would create a new appropriation/withdrawal limit for the Permanent Fund.
HOW DOES POMV WORK?
The Trustees’ plan would limit yearly withdrawals from the Fund to no more than 5 percent of the Fund’s market value, averaged over five years. This would leave 95 percent of the Fund protected from spending.
HOW DOES THE FUND WORK NOW?
Under the current structure, all of the money in the realized earnings account is available for appropriation by the Legislature. In addition, the Fund’s unrealized gains are available for appropriation/withdrawal if these assets are sold. There are years when this has left more than 20 percent of the Fund unprotected.
ISN’T POMV A RAID ON THE FUND?
No. The Legislature may already spend the earnings of the Fund, and does so when it authorizes the Permanent Fund Dividend each year. POMV would actually place a tighter and more predictable limit on how much the Legislature could withdraw from the Fund each year.
IF IT ISN’T BROKEN …
The Trustees believe that while the Fund has worked well in the past, necessary changes in the investment portfolio have caused the Fund's income and payout method to no longer be compatible, and have left the Fund more vulnerable to overspending. Over the years, the Legislature has decided not to exercise the option of withdrawing the leftover funds in the realized earnings account, and this restraint has significantly contributed to the Fund’s growth. The Trustees want to ensure that the Fund will remain protected in the future, as the Legislature faces potential deficits and looks for available money to fund the state’s budgets.
HOW WOULD POMV AFFECT MY DIVIDEND?
POMV does not directly affect the dividend, it simply limits how much can be taken from the Fund each year. Right now dividends are calculated using a formula written in
WHAT’S THE LATEST NEWS ON
The Fund’s Board of Trustees continues to support the proposal and encourage the Legislature to put a POMV constitutional amendment on the 2008 general election ballot for Alaskans to consider.
