State and Local Public Retirement Systems

In recent years, state policymakers have been bombarded with warnings about the sustainability of their public pension systems. A Pew Center on the States 2010 report warned that there was a $1 trillion gap between what states had set aside for pensions and the real price tag for those benefits. But after years of bad news, things are starting to look up.  2010 was the first year that public pension systems have shown positive earnings since 2007, just before financial markets – and public pension assets – took a dive. Those retirement systems saw a $722.2 billion loss in 2009 and a $178.8 billion loss in 2008.

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State and local pension assets rebounded in the 2010 fiscal year after two years of losses.1

  • State and locally administered public employee retirement systems had $2.7 trillion in total cash and investment holdings in 2010, a $257.2 billion, or 10.6 percent, increase over 2009.
  • 2010 was the first year that state and local retirement systems have shown positive earnings since 2007, just before financial markets—and public pension assets—took a dive. Those retirement systems saw a $722.2 billion loss in 2009 and a $178.8 billion loss in 2008.
  • State-only administered pension systems made up 83 percent of total holdings and investments for all state and locally administered pension systems in 2010. Those state-only systems increased in value by 10.7 percent in 2010, while local systems increased in value by 10.3 percent.
Most investment categories showed increases in 2010, with corporate stocks driving the largest gains.
  • Collectively, the only investment categories to decrease in value in 2010 were cash and short-term investments, mortgages and real property. Those three categories represented 7.9 percent of total holdings in 2010.
  • Corporate stocks contributed $110 billion to the overall increase in assets, growing from $820.2 billion in 2009 to $930.2 billion in 2010, a 13.4 percent increase.
  • Foreign and international securities also contributed to asset gains, increasing from $370.8 billion in 2009 to $421.9 billion in 2010, an increase of 13.8 percent. Corporate stocks and bonds and foreign and international securities made up 66.4 percent of total holdings in 2010.
  • Governmental securities, including the U.S. Treasury, and corporate bonds round out investment categories with gains in 2010, increasing by 7.8 percent ($16.8 billion) and 2.8 percent ($11.8 billion) respectively.
While all states saw an increase in their total cash and investment holdings in 2010, those increases varied significantly.
  • Pennsylvania saw the smallest increase at 2.7 percent, followed by Michigan at 4 percent and Kansas at 5.1 percent.
  • New Mexico had the biggest year-over-year increase, jumping by 25.5 percent, followed closely by Wyoming at 22.9 percent and Wisconsin at 18.8 percent.
  • California had the largest amount of cash and investment holdings in 2010, valued at $516.1  billion, followed by New York with $302.3 billion and Texas with $174.7 billion.
  • Vermont with $2.9 billion, North Dakota with $3.1 billion and New Hampshire with $5 billion had the least holdings of all states in 2010. 


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