Public retirement systems managed to shave their administrative and investment expenses and took other cost-efficiency measures in 2019, according to an annual study released Monday by the National Conference on Public Employee Retirement Systems.
The 2019 NCPERS Public Retirement Systems Study, conducted with Cobalt Community Research, covered the most recently concluded fiscal year. Of the 155 state and local pension systems responding, 62% were local systems and the rest were state systems, with a collective 12.6 million participants and more than $1.4 trillion in assets.
In the latest fiscal year, the pension systems averaged 0.55% in administrative costs and investment manager fees, down from 0.6% the year before.
Lowering assumed rates of return was also a trend, with 59% of respondents doing so, and another 23% considering it. NCPERS also found that 45% raised their benefit age and service requirements, and 34% increased employee contributions. Many responding funds did not offer a cost-of-living adjustment in the most recent fiscal year, and the average adjustment was 1.6%, slightly lower than the previous year.
Weaker than expected one-year returns saw funding levels drop to 71.7%, from 73.6% the previous fiscal year. Average annual returns were 4.5% for one year, 7.1% for five years, 7.7% for 10 years and 11.2% for 20 years.
NCPERS is the largest trade association for public-sector pension funds, representing more than 500 funds throughout the U.S. and Canada with a collective $4 trillion in pension assets.
"Pension systems are constantly looking for ways to strengthen their performance and provide a secure income for millions of public servants," said Hank H. Kim, executive director and chief counsel of NCPERS, in a statement.
