US. Pension funds pin their hopes on inflation
America’s biggest private sector pension plans did so badly last year that they earned barely half as much as the traditional low-risk, low-fee balanced portfolio of stocks and bonds.
So report international pension consultants Milliman & Co.
It says something about the usual performance of U.S. company pension plans that Milliman calls this 2021 result a “win.”
(On the bright side, though, company pensions still did much better than Social Security, whose investments effectively lost money.)
The 100 biggest private sector pension plans earned an average investment return on their assets of just 8.3% in 2021, Milliman calculates. This, during a year when the S&P 500 SPX, -0.63% earned 29%, the Vanguard index fund of U.S. REITs VNQ, 0.13% earned 41%, and the Vanguard Balanced Index Fund VBINX, -0.64%, which invests 60% of its money in U.S. stocks and 40% in low-risk bonds, managed 14%.
(A global portfolio, consisting of 60% world stocks VT, -0.55% and 40% world bonds BNDW, +0.31%, earned 10%.)
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