Tuesday, July 26, 2016

20-Year Annualized Average Public Pension Returns At Lowest Level: Funding Shortfall Expected

From The Wall Street Journal, "Pension Returns Slump, Squeezing States and Cities: Long-term returns for U.S. public pensions are expected to drop to the lowest levels ever recorded" by Timothy W Martin:
Long-term returns for U.S. public pensions are expected to drop to the lowest levels ever recorded, portending deeper pain for states and cities as a $1 trillion funding gap widens.

Twenty-year annualized returns for public pensions in the U.S. are poised to decline to 7.47% once fiscal 2016 results are released in coming weeks, according to an estimate from Wilshire Trust Universe Comparison Service, which tracks pension investment returns.
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Public Pension 20 Year Average Annual Investment Returns
Source: The Wall Street Journal
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Funding shortcomings often mean taxpayers or workers are asked to chip in more to account for rising liabilities. Every one-percentage-point drop in investment returns represents an increase of 12% in liabilities, according to the Center for Retirement Research at Boston College.

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