State Pension Funding Drop to Lowest Level in 30 Years, Wilshire Says

Market volatility from the coronavirus dropped funding for state pension plans to its lowest level in 30 years, according to a report from Wilshire Consulting.

In the first quarter, the aggregate funded ratio for state retirement systems fell to 62.6%, a 12.2 percentage point drop from 74.8% in December, according to a report last week from the advisory firm. In the past 12 months, that represented a 9.3 percentage point tumble.

Returns fell below zero for nearly all the asset classes, which fell an aggregate 15.7% for the quarter. By comparison, liability values fell just 0.7%.

The decrease could affect contributions in the coming year, particularly for those with already low funding ratios. In states such as New Jersey and Illinois, poorly funded pension plans are squeezing government budgets already tight from tackling the coronavirus crisis.

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New Jersey’s Gov. Phil Murphy, anticipating budget cuts, asked the Trump administration for aid. And in Illinois, roughly one-fifth of taxpayer dollars go to pensions before any revenue losses, according to a Pew report.

Operating without the usual influx of tax revenues, governors are pleading with Washington for federal aid for expenditures. Even states that went into the public health crisis with a strong cash position, such as New York, are asking for additional relief.

The advisory firm calculated the funding ratio based on an assumed portfolio that allocates 29% to US equity, 18% to non-US equity, 10% to private equity, 22% to core fixed income, 6% to high yield bonds, and 15% to real assets.

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Tags: Coronavirus, COVID-19, Defined benefit (db) pension plans, Funding, Investment, Pension, ratio, Retirement

Chief Investment Officer magazine (ai-cio.com) is honored to announce that it won the award for Best Media Brand, or what the Jesse H. Neal Awards judges call “the highest accolade in journalism” for 2019-2020, for the second year in a row.

Now in its 66^th year, the annual Jesse H. Neal Awards, named after Connectiv’s first managing director, are dubbed “the most prestigious editorial honors in the field of specialized journalism.”

The Best Brand category was judged by how clearly a publication aligned its editorial mission, presentation, service to readers, innovation, and use of multiple content platforms to serve its audience. The competition included 21 categories and more than 498 media competitors. It is the fourth time in five years that CIO has won the award.

Judges mentioned that CIO’s “Editors, writers, and their creative and infographic partners work well to deliver up a potent array of high-value, actionable, and loyalty-inspiring material.” They noted, “alignment between editorial focus and investment into data, analysis, and reporting and the CIO audience comes through loud and clear.”

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According to Connectiv, award “recipients reflect the highest principles of editorial integrity in educating and informing business, professional, and industrial communities.”

The team at CIO is honored and humbled to receive this award among such a talented pool of competitors, and we’d again like to thank you, our readers, for making what we do possible.

By Chief Investment Officer’s Editorial, Design, and Events Team

Third Time in Four Years: CIO Wins Best Media Brand Award

Tags: Awards, Connectiv, editorial, Jesse H. Neal Awards