State pensions saw huge earnings drop in ’12

How are the nation’s state government pension funds faring? The U.S. Census Bureau, among others, likes to keep track and just issued its latest report.

The bottom line? Earnings at state-administered pension systems remained in positive territory in 2012 for the third consecutive year since the Great Recession. That’s the good news. The bad? State public pension investments earned a total of $91.8 billion in 2012, compared to $414 billion in 2011, a nearly 80 percent plunge.

Total cash and investment holdings also dropped, though just slightly, falling to $2.519 trillion in 2012 vs. $2.544 trillion in 2011, a decrease of 1 percent.  

Here’s a closer look at the numbers, slicing and dicing them only as Census can:

States with the largest total cash and investments

Not surprisingly, the states with the largest population also had the highest level of cash and investment holdings in their public pension systems. California, New York, Texas, Ohio, Florida and Illinois were the top pension-holders in the nation.

California had $430.2 billion in cash and investment holdings, with nearly $14 billion of earnings on investments in 2012; New York had $236.8 billion in total cash and investment holdings, with $10.8 billion of earnings on investments; Texas had $170.7 billion in total cash and investment holdings, with $20.8 billion of earnings on investments; Ohio $146 billion in cash and investment holdings, with $1.9 billion in earnings on investments; and Illinois had $87.7 billion in cash and investment holdings, with $742.5 million in earnings on investments.

States with the smallest total cash and investments

Rhode Island, Wyoming, New Hampshire, North Dakota and Vermont had the lowest levels of cash and investment holdings in their pension systems.

Rhode Island had $7.3 billion in cash and investments in 2012; Wyoming had $6.2 billion in cash and investments; New Hampshire had $5.7 billion in cash and investments; North Dakota had $3.6 billion in cash and investments; and Vermont had $3.3 billion in cash and investments.

Top investments

The top investments within state-administered defined benefit retirement systems were corporate stocks at $934.6 billion, foreign and international securities at $450.7 billion, corporate bonds at $315.7 billion, miscellaneous investments at $292.4 billion, real property at $106.2 billion, funds held in trust at $34.7 billion, other nongovernmental securities at $32.1 billion and mortgages at $9.6 billion.


Total revenue for state-administered pension systems

Total revenue for state-administered pension systems was $202.8 billion in 2012, with employee and government contributions comprising 54.8 percent of total revenue and the remaining 45.2 percent of the total comprised of earnings on investments.

Earnings for state-administered pension systems Earnings for state-administered pension systems remained in the black for the third consecutive year, totaling $91.8 billion in 2012. By comparison, earnings on investments totaled $414 billion in 2012. By further comparison, these funds were deep in the red during the downturn, with losses of $71.7 billion in 2008 and $511.5 billion in 2009.

Total contributions for state-administered pension systems

Total contributions to state-administered pension plans increased 4.98 percent, rising from $105.9 billion in 2011 to $111.1 billion in 2012. Total contributions include employee contributions and government contributions. Employee contributions increased 5.6 percent from $34.1 billion in 2011 to $36 billion in 2012 and comprised 32.4 percent of total contributions in 2012. Government contributions increased 4.6 percent from $71.8 billion in 2011 to $75.1 billion in 2012 and comprised 67.6 percent of total contributions in 2012.

Expenditures for state-administered pensions

Total payments by state-administered pension systems increased 4 percent from $189.1 billion in 2011 to $196.7 billion in 2012. The increase in total payments was driven by an increase in benefit payments, which comprised 93.7 percent of total payments in 2012.

Benefit payments increased by 4.3 percent, from $176.8 billion in 2011 to $184.4 billion in 2012. Withdrawals increased 3.6 percent to $4.1 billion and other payments, which include administrative expenses such as investment fees decreased 2 percent to $8.3 billion in 2012.

The average benefit payment for these plans was $24,246 in 2012. The state with the highest average annual benefit payment was Connecticut, with an average payment of $36,807.

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