US. Beleaguered Public Pension Funds Make Record Gains in Second Quarter
Public pension funds set a 22-year performance record in the second quarter, recovering some but not all of their losses from the first quarter.
Double-digit stock gains pushed pension returns to a median 11.1% for the second quarter, according to Wilshire Trust Universe Comparison Service.
Even with the rebound, median annual returns for the public pensions whose fiscal years ended June 30 were 3.2%, far short of the funds’ long-term investment-return target of around 7%.
“That’s the funny thing with math, if you go down 20%, a 20% return does not make it up.” said Robert J. Waid, managing director at Wilshire Associates. Before the pandemic, public pensions were already trying to plug large funding holes by pursuing aggressive returns to make up for insufficient government funding in past years and decades.
State and local pension funds in the U.S. held $4.05 trillion in aggregate as of March 31—$4.93 trillion less than the cost of promised future obligations, according to Federal Reserve data. Investment shortfalls drive up the amount state and local governments have to pay in. Funds are also bracing for coronavirus-related government-revenue losses
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