Confidence among public pension fund officials about their plans' long-term sustainability is on the rise, according to survey results released Tuesday by the National Conference on Public Employee Retirement Systems.
The 2015 NCPERS Public Retirement Study surveyed 179 state and local government pension funds representing $2 trillion in assets during the third quarter. Of those, 32% were state plans and 68% were local funds.
Pension fund officials' overall confidence rose slightly on a 10-point scale, to 8 from 7.9 in 2014 and 7.4 in 2011. The average funding level of the surveyed plans also rose, to 74.1% from 71.5% in 2014.
The survey also showed a decline in the total average cost of administering funds and paying investment managers, to 60 basis points from 61 the previous year.
The annual survey is conducted with Cobalt Community Research.
In a release about the survey results, NCPERS attributes the improvement in funding level to three factors: average one-year investment returns as of Sept. 30 of 11%, lower amortization periods, and the time since the 2008 market crash, which affected those pension funds using five-year smoothing. The NCPERS survey also found strengthening investment discipline and signs pointing to long-term improvement in public retirement systems' funded status.
“Our annual survey shows that public pension plans are committed to ensuring long-term sustainability for their stakeholders, and are making tough decisions when necessary,” NCPERS Executive Director and Counsel Hank H. Kim said in a statement. “Public pension plans have worked hard to keep their costs low, and they are adapting to new political, social and market realities to ensure that they are sustainable for the long run.”