City Pension Funding in 2012 Fell Most in 3 Years, Wilshire Says
U.S. city and county pensions had 69 percent of assets required to meet obligations to retirees in fiscal 2012, an 11 percentage point drop from the prior year, according to Wilshire Consulting.
Funding levels for more than 100 retirement systems reviewed by Santa Monica, California-based Wilshire fell as the European debt crisis and a slowing global economy depressed stock returns. It was the steepest decline in funding since fiscal 2009.
“This deterioration in funding ratio was fueled by global stock market volatility” in the year through June 2012, Wilshire said in a release.
Of the 105 city and county retirement systems that reported data for 2012, 92 percent are underfunded, according to Wilshire.
U.S. state and local-government pension investments ended the year through June 2012 with a median gain of 1.15 percent, Wilshire reported in August 2012. Assets bounced back in fiscal 2013 as pensions booked a median gain of 12.4 percent. City and county pensions allocated an average 61 percent of assets to stocks, real estate and private equity, according to Wilshire.
For the 105 systems that reported actuarial data on or after June 30, 2012, pension assets were $387 billion, a gain of 2 percent from the prior year, Wilshire said. Liabilities grew 16 percent to $560.6 billion.
Wilshire forecasts a long-term annual median return on city and county pension assets of 6.7 percent, below the median assumption of 7.75 percent.
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