Graphic: The challenge for public pension plans
Facing muted equity returns and lower inflation, plans prepare for sluggish growth.
International move: Public plans have lowered their U.S. equity exposure over the past 10 years, while modestly increasing non-U.S. equity allocations.
Not enough return: Historical returns based on average policy allocations reveal that returns aren't meeting requirements. Returns were calculated by P&I based on annual plan allocations provided by Wilshire.
Too optimistic: Return assumptions, on the decline since 2001, still look rather optimistic when compared to recent performance. Inflation expectations have been falling as well.
Risk slip ends: Volatility has fallen significantly post-crisis, as rolling three-year figures slid below 8% in mid-2015. Risk has since been on the rise starting in the second half of 2015.
*Annualized. Sources: Bloomberg LP; Wilshire Associates; publicplansdata.org
Compiled and designed by Charles McGrath and Gregg A. Runburg
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