WSJ: Public Pension 20-year Returns Will Sink to New Low


The 20-year annualized returns for U.S. public pension are expected to drop to the lowest levels ever recorded, the Wall Street Journal reported. Expect American municipalities and businesses to redouble efforts to contain health-care costs for their beneficiaries.

Wilshire Trust Universe Comparison Service expects the 20-year average to drop to 7.47%, as compared to 12.3% in 2001, when it first started tracking the number.

For instance, the California Public Employee’s Retirement System (CALPERS) reported a fiscal 2016 return of 0.6%, causing the plan’s 20-year annualized returns to drop to 7.03%. CALPERS has an estimated funding gap of $112 billion.

California is not alone it its unfunded liabilities problem. The article also notes that Connecticut allocates 10% of its budget to pay down unfunded pension liabilities.