Longer-term investment returns are on the upswing for public pension plans, according to the 2012 Public Fund Survey conducted in April and May by the National Conference on Public Employee Retirement Systems.
The 10-year annualized gross investment return in the 2012 survey rose to 5.3% from 4% in 2011, while the 20-year annualized return went to 8.7% from 8%. The one-year return dipped to 12.5% from the 13.5% reported in the 2011 survey.
It confirms that plans are investing wisely, said NCPERS Executive Director Hank H. Kim in an interview.
The plans are still holding their own. There is high confidence among the plans that they are sustainable long term, Mr. Kim said.
On asset allocation, the pension plans reported less domestic equity exposure compared to the previous survey, 36% vs. 39%. Funds with the highest 10-year returns had significantly higher allocations to international equity, domestic fixed income and alternative asset classes. Funds with the highest one-year return had higher allocations to domestic and international equity.
The NCPERS survey covered 146 state and local government pension funds representing total assets of $1.2 trillion; 84% of respondents were local and 16% were state pension funds. Respondents were asked to provide the data as of their most recent completed fiscal year.