Public Pensions in Recovery

April 21, 2011 ( - At the end of calendar year 2010, aggregate state and local government retirement system assets totaled $2.93 trillion, a 35% increase from their quarterly low point during the market collapse.

These asset levels are also nearly 25% higher than they were on June 30, 2009 – a date on which many recent studies on the financial condition of state and local pension trusts are based, the National Association of State Retirement Administrators and the National Council on Teacher Retirement pointed out in an Issue Brief. Since then, not only have investment returns rebounded sharply, but many states have adopted changes to benefit levels and financing structures that have positively impacted pension trusts.  

According to the Issue Brief, while the recent rebound in asset values is noteworthy, long-term investment return performance is most critical, and data indicates that over longer periods (20 and 25 years) public pension funds have met or exceeded their investment return assumptions (typically 7.5% to 8.5%).  

In the past few years, nearly two-thirds of states have made changes to pension benefit levels, contribution rate structures, or both to improve the long-term sustainability of their retirement plans. The report said changes enacted in recent years include raising the age, years of service, or both, required to qualify for a retirement benefit; reducing rates of benefit accrual; increasing employee contribution rates; and reducing future cost-of-living adjustments for existing retirees.   

“These will positively impact the financial condition of state and local retirement systems,” the report concluded.  

The Issue Brief is at