Major Public Pensions Hit All-Time High of $3 Trillion

The U.S. Census Bureau has released data on year-end pension assets for 2013 from the 100 largest public employee pension systems in the United States. These systems account for 89.4% of all public pension assets, so this is a barometer for public pension systems as a whole. The new figure is a record of $3.061 trillion. By our take, the real news is in the securities allocations of government employee pension assets being much larger in international securities than government bonds.

Cash and security holdings rose by 4.2% from the third quarter, and they rose by 12.5% from the end of 2012.

A rising stock market aided these gains. Corporate stocks rose 5.9% from the third quarter to $1.12 trillion, while the increase was 18.1% from the end of 2012. Stocks also made up 35.1% of the total pension assets.

Corporate bonds posted rose in assets by 4.6% from the prior quarter to $337.0 billion, but that is a 1.3% decrease from 2012. Corporate bonds accounted for 10.6% of all assets.

International securities rose by 4.4% from the third quarter, up to $665.9 billion at year end. This was a 14.2% gain in value from 2012, and international securities now account for some 20.9% of all pension assets.

Federal government securities rose only 0.3% from the third quarter to $267.0 billion at the end of 2013. This was up by 5.9% from the end of 2012, and federal government securities comprised only 8.4% of the total pension cash and security holdings of major public pension systems.

The long and short of the matter is that U.S. public pension systems have 2.5 times as much tied up in international securities than they do in U.S. government bonds. Do the politicos realize this? Remember that these are public worker pensions; i.e. government employees.

Government contributions to employee contributions was at a 2.7-to-1 ratio in the fourth quarter of 2013.