Publications

- October 1, 2022: Vol. 34, Number 9

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U.S. pension funds in fragile state after highest returns in history

by Kali Persall

Despite recording some of the best investment returns in history, the state retirement systems in the United States are still fragile, says a recent report issued by the Equable Institute.

Although record investment returns and economic growth have driven the aggregate funded ratio of U.S. state and local pension plans up to 84.8 percent for the 2021 fiscal year, the report, titled State of Pensions 2022, estimates the aggregate 2022 funded ratio will decline to 77.9 percent — the largest single-year decline in funded ratio since the Great Recession — and aggregate unfunded liabilities, which have dipped below $1 trillion, will increase to $1.4 trillion .

In first half 2022, pension funds weathered the impacts of a bear market, geopolitical conflict and record inflation, effectively erasing nearly half of the record gains of 2021.

On a bright note, the report notes the net trend between 2019 and 2022 is still positive, with improved funded status.

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