04/20/2024

America’s Pension Funds Fell Short In 2019

Public pension plans fell short of their projected returns this year, adding to the burden on governments struggling to fund promised benefits to retired workers.

Public plans with more than $1 billion in assets earned a median return of 6.79% for the year ended June 30, the lowest since 2016, according to Wilshire Trust Universe Comparison Service data released Tuesday. Public pension plans project a median long-term return of 7.25%, according to data collected by Wilshire Associates in 2018.

Each year, pension funds must make this estimate on how much they expect to earn on investments. The projection determines the amount the government that is affiliated with the pension fund must pay into it.

Robust returns reduce the need for government support. When returns fall short, however, the amount the government must contribute increases, potentially diverting money from other public services.

“I think a lot of plans fell a little bit short,” said Becky Sielman, principal and consulting actuary at Milliman. “Bonds generally did well, but there are other asset classes that didn’t do as well.”

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