According to the 2012 NCPERS Public Fund Study, conducted by the National Conference on Public Employee Retirement Systems (NCPERS) and Cobalt Community Research, participating funds reported an average funded level of 74.9%, only slightly below the 2011 average of 76.1%.
Both one-year and 20-year returns reported by participating funds point to continuing long-term improvement in funded status. While one-year returns were slightly lower than 2011’s (12.5% compared to 13.5%), all longer-term returns were higher: three-year returns jumped from -1.0% to 4.4%; five-year returns grew from 3.6% to 4.4%; 10-year returns increased from 4.0% to 5.3%, and 20-year returns grew from 8.0% to 8.7%.
Pension funds are designed to pay off liabilities over an extended period of time (the amortization period), to ensure long-term stability and to make annual budgeting easier through more predictable contribution levels. This year’s survey found that amortization period averages 24.6 years – down from 25.8 years in 2011.
Asked about readiness to address retirement trends and issues, respondents provided an overall confidence rating of 7.7 on a 10-point scale – up from 7.4 in 2011.
Market returns remained the largest source of fund income (73%), while employer contributions accounted for 17% and member contributions amounted to 10%.