US Public Pension Assets Reach 3-Year Peak at $2.8 Trillion in Q2

New data from the Census Bureau has revealed that assets for the 100 largest public employee pensions systems in the United States rose more than 1% to $2.8 trillion during the second quarter.

(September 30, 2011) — The US Census Bureau has reported that public pension plan assets have hit a three-year high.

The data showed that the assets for the nation’s 100 largest public employee pensions systems rose more than 1% to $2.8 trillion during the second quarter of 2011, 1.3% higher than three months earlier and 17.6% higher than a year earlier.

All major categories tracked by the Census Bureau — stocks, bonds, US and international securities — experienced overall gains over the same quarter in 2010, adding $414 billion to the systems’ holdings, the report asserted.

According to the report, stocks, which comprise 32% of all holdings, increased 19.5% from June 30, 2010, adding $145.3 billion. Corporate bonds, which represent 15.8% of holdings, increased 2% for the quarter and 5.6% year-to-year, reaching $438.5 billion and representing an asset increase of $8.5 billion for the quarter and $23.1 billion for the year. International securities, at 18.9% of holdings, had a year-to-year increase of 28.7%. Federal government securities, at 6.3% of all holdings, gained 1.5%, or $2.6 billion, over the quarter, but just 0.1% over the year.

Despite this good news as public pension funds slowly climb their way back to pre-crisis levels, recent market volatility has erased billions of dollars in gains for many funds. For example, Joseph Dear, the chief investment officer of the California Public Employees’ Retirement System (CalPERS), told CNBC last month that the fund lost about $18 billion off the value of its stock portfolio from July 1 until August 9. The large decline came just weeks after both CalPERS and the California Teachers’ Retirement System (CalSTRS) posted annual investment gains of more than 20% in the fiscal year that ended June 3. While CalPERS’ assets grew by $37 billion to $237.5 billion, CalSTRS added $29 billion to reach $154.3 billion.

Recent market turmoil has also plagued international pension funds. The Netherlands’ ABP, one of the world’s biggest schemes, told the Wall Street Journal that the market slump is having a substantial impact on its funding ratio, which fell below 100% in the beginning of August from 106% at the end of July.

Meanwhile, a study by Mercer conduced last month revealed that market volatility in the first six trading days of August dealt a severe blow to pension plans sponsored by S&P 1500 companies, with the aggregate funded status decreasing by $191 billion to a funding deficit of $496 billion and an aggregate funded ratio of 73% as of the market close on August 8.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href=''></a>; 646-308-2742