First Fiscal-Year Gain for US Public Plans Since 2007

(October 14, 2010) — Assets are finally on the rise at top US public pension funds, according to the Census Bureau’s latest report.

Holdings of the 100 largest US public-employee retirement systems enjoyed a spike in their assets, which rose 6.8% for the 12 months to June, representing the first fiscal-year gain since 2007.

While still below their 2007 peak of $2.93 trillion, the report revealed that pension assets are on the upswing with state and local funds holding $2.35 trillion as of June 30, up from $2.2 trillion a year earlier.

Of all asset classes during the quarter, domestic corporate stocks performed the worst. The asset class lost 13.6% from the prior three months. Mortgages, which gained 5.5%, and federal government securities, up 1.7%, were the only asset classes to post gains, the report said. Furthermore, benefits paid from the funds, which account for about 89% of financial activity among all public retirement funds, totaled about $176 billion, a 7.8% increase from a year earlier.

Additionally, the report showed that US stocks were the largest holdings among the funds, composing about 31% of assets.

The Census Bureau’s recent findings come after the Kellogg School of Management and the University of Rochester showed that only six major US cities have pension assets that can only pay for promised benefits for the next 10 years. The report, entitled, “The Crisis in Local Government Pensions in the United States,” said Philadelphia, Boston, Chicago, Cincinnati, Jacksonville and St. Paul had enough assets to pay for benefits until 2020.