Wilshire, Northern Trust: Pension fund returns average about 12.3% in 2012

Master trusts in the Wilshire Trust Universe Comparison Service had a median 1.7% return in the fourth quarter and 12.38% return for the year ended Dec. 31.

Also released Monday, Northern Trust reported the universe it tracks of more than 300 U.S. plans had a median return of 12.3% for the calendar year, led by corporate defined benefit plans.

Public funds had the highest median return for the three months ended Dec. 31, at 1.86%, in the Wilshire report. Close behind were foundations and endowments, 1.77%, and corporate DB plans, 1.66%.

For the 12 months ended Dec. 31, corporate DB plans led with a 12.82% return, according to Wilshire. Public plans returned 12.69%, followed by foundations and endowments, 12.17%; and Taft-Hartley defined benefit plans, 11.56%.

This is the fourth straight year and the ninth out of the past 10 years with median positive returns for all plan types in Wilshire's universe, including three double-digit gains in the past four years.

Northern Trust also reported corporate plans had the highest calendar-year returns at a median 13.6%, followed by public plans, 12.9%, and foundations and endowments, 11.5%. Corporate plans were aided by the largest median public equity allocations at 47%.

For the year, public equity was the top performing asset class with a median 16.9% return, with 18.2% for international equity and 16% for U.S. equity, according to the Northern Trust report. The median private equity return was 10% and total fixed income, 8.8%.

Larger plans had higher returns both for 2012 and the 10-year periods. All master trusts with more than $1 billion in assets returned a median 13.04% for the year and 8.15% for 10-year returns, according to Wilshire. Master trusts with more than $5 billion in assets returned 13.45% and 8.13%, respectively. The median 10-year return for all master trusts was 7.55%.

Public plans with at least $1 billion returned a median 7.96% for the last 10 years, a full percentage point higher than smaller plans.

Wilshire TUCS includes more than 1,500 plans with more than $2.7 trillion in assets. Northern Trust's universe consists of more than 300 plans with a combined $760 billion in assets.