How Public Pensions Invested Assets

According to the Quarterly Survey of Public Pensions compiled by the U.S. Census Bureau for the 100 largest public-employee retirement systems in the country, cash and security holdings totaled $2,943.5 billion in the second quarter of 2013, reaching the highest level since the survey began collecting data in 1968. Cash and security holdings had a quarter-to-quarter increase of 0.4%, from $2,931.8 billion last quarter, and a year-to-year increase of 8.4%, from $2,715.4 billion in the second quarter of 2012. Earnings on investments totaled $38.3 billion in the second quarter of 2013.

Corporate stock holdings quarter-to-quarter increased 0.6%, from $1,006.9 billion to $1,013.2 billion in the second quarter of 2013. Corporate stocks year-to-year increased 7.4%, from $943.1 billion in the second quarter of 2012. Corporate stocks comprised about one-third (34.4%) of the total cash and security holdings of major public pension systems for the current quarter.

The survey found corporate bond holdings quarter-to-quarter decreased 1.5%, from $330.8 billion to $325.7 billion in the second quarter of 2013. Corporate bonds year-to-year decreased 9%, from $357.9 billion in the second quarter of 2012. Corporate bonds comprised less than one-eighth (11.1%) of the total cash and security holdings of major public pension systems for the current quarter.

International securities holdings quarter-to-quarter decreased 0.7%, from $596.7 billion to $592.6 billion in the second quarter of 2013. International securities year-to-year increased 16.8%, from $507.4 billion in the second quarter of 2012. International securities comprised about one-fifth (20.1%) of the total cash and security holdings of major public pension systems for the current quarter.

Federal government securities holdings quarter-to-quarter decreased 0.1%, from $267.3 billion to $267.1 billion in the second quarter of 2013, according to the survey. Federal government securities year-to-year increased 6.9%, from $249.8 billion in the second quarter of 2012. Federal government securities comprised less than one-tenth (9.1%) of the total cash and security holdings of major public pension systems for the current quarter.

The survey also found government contributions had a quarter-to-quarter increase of 11.8%, from $20.4 billion to $22.8 billion in the second quarter of 2013, and a year-to-year increase of 2.3%, from $22.3 billion in the second quarter of 2012. Employee contributions had a quarter-to-quarter increase of 21.2%, from $9.4 billion to $11.4 billion in the second quarter of 2013, and a year-to-year increase of 11.2%, from $10.3 billion in the second quarter of 2012.

Government contributions to employee contributions had a 2 to 1 ratio this quarter—government contributions comprised 66.6% and employee contributions comprised 33.4% of total contributions. Total payments totaled $62.2 billion, reaching the highest level yet. Total payments quarter-to-quarter increased 3.6%, from $60.0 billion last quarter, and a year-to-year increase of 16.8%, from $53.2 billion in the second quarter of 2012.

The survey examined a panel of the 100 largest state and local government pension systems, as determined by their total cash and security holdings reported in the 2007 Census of Governments. These systems comprised 89.4% of financial activity among such entities, based on the 2007 Census of Governments.

More information about public pensions can be found here.