Public Pensions Up 12% Get Most in 2 Years as Stocks Soar
By Martin Z. Braun - Aug 6, 2013 12:01 AM ET
U.S. state and local-government pension investments gained the most in two years in fiscal 2013, overshadowed by intensifying scrutiny of underfunded municipal-retirement plans following Detroit’s record bankruptcy.
Public pensions booked a median gain of 12.4 percent for the 12 months through June, powered by a surge in U.S. stock prices to a record, Wilshire Associates said today in a report. The funds chalked up an annualized three-year median return of 11.4 percent while their assets surpassed a pre-recession peak to reach $2.9 trillion, according to U.S. Census Bureau figures.
“I’d be happy,” said Bob Waid, a managing director at Santa Monica, California-based Wilshire. “We’ve had a pretty good three-year run.”
Detroit, a former auto-manufacturing powerhouse that has lost more than 60 percent of its population since 1950, sought bankruptcy-court protection on July 18 with about $18 billion in liabilities. That included an estimated pension deficit of as much as $3.5 billion and $5.7 billion in uncovered retiree health benefits. The filing prompted U.S. governors to call for more local-finance oversight in a meeting that ended yesterday.
The Federal Reserve’s policy of keeping short-term interest rates near zero, robust corporate earnings and an improving economy helped drive U.S. shares to records since January. The S&P 500 Index surpassed its pre-recession intraday peak of 1,576.09, set in October 2007, for the first time in April.
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