The aggregate funding ratio of city and county pension plans improved six percentage points in 2014 to 75%, said a report from Wilshire Consulting.
Assets of the 101 city and county pension funds that reported actuarial data on or after June 30, 2014, totaled $468.1 billion, up 12.5% from the previous year.
Liabilities also rose, up 4.3% from the previous year to $626.4 billion.
Russell J. Walker, vice president at Wilshire Consulting and a co-author of the report, said there were two major takeaways from fiscal year 2014 for city and county plans, which had affected state plans as well.
“It was an interesting year in that not only did markets help improve funding ratios for these plans, but it was during a period where they also had to start addressing new accounting rules that affect how they report their net pension liabilities and therefore how the funding ratios get reported.”
The changes mandated by GASB 67 require pension funds to report the market value of assets rather than smoothed assets. Mr. Walker said Wilshire’s studies already utilize the market value.
Also, the average asset allocation for city and county pension funds was 31.9% domestic equity, 22.9% domestic fixed income, 20.1% international equity, 11.5% other, 7.1% real estate, 4.9% private equity and 1.6% international fixed income.
Mr. Walker said the asset allocation for the most recent fiscal year continues the trend away from home-country bias and moving into more diversifying assets.
For example, the report said the average asset allocation for fiscal 2009 was 37.1% domestic equity, 28.7% domestic fixed income, 16% international equity, 9.1% other, 5.4% real estate, 2.6% private equity and 1.1% international fixed income.
Wilshire Consulting is the institutional investment advisory and outsourced CIO unit of Wilshire Associates.