In a case of "who are you going to believe, exactly," the news today suggests that some public pensions are in fact well-funded and totally sustainable for the future – though we keep hearing much to the contrary.
The 2012 National Conference of Public Employee Retirement Systems Public Fund Study, which looked at the finances and fortunes of nearly 150 public pension funds across the country, says that things are looking good for those surveyed, both now and in the future.
The participating funds, 84 percent of which were local pension funds, showed an average funded level of almost 75 percent, down a percent from last year, and both short-term and long-term returns suggest improvement in their funded status.
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"The data we collected shows public pension funds are continuing their strong recovery from the historic market downturn of 2008-2009," said Hank Kim, NCPERS' executive director and counsel, in a statement.
"The survey shows public pensions are managing their assets efficiently and effectively, making plan design changes to ensure sustainability and are expressing strong and growing confidence about their readiness to address the challenges ahead."
Those surveyed also stated they have a confidence rating of about 77 percent, suggesting they are positive about addressing retirement trends and issues, NCPERS adds.
Among the survey's other findings:
- Overall plan administration and management fees were 73.1 basis points, up from 2011′s 69.2 basis points. By comparison, the organization says most equity or hybrid mutual funds average 95 basis points for their fees.
- One-year returns are down 1 percent from last year (12.5 percent), but three-year returns have gone up from negative 1 percent to 4.4 percent, five-year returns are up to 4.4 percent and 10-year returns have jumped from 4.0 percent to 5.3 percent. Twenty-year returns are now plotted at 8.7 percent.
- The pension funds' amortization period has been readjusted to 24.6 years from 25.8 years in 2011.
- Market returns still make up the largest growth factor for fund income (73 percent) while employer contributions make up 17 percent and member contributions add 10 percent.
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