US - Despite concerns over whether or not public pension funds have set unrealistically high return targets, a new report shows that long-term returns have beat assumptions.
The National Association of State Retirement Administrators' (NASRA) report, Public Pensions Plan Investment Return Assumptions, showed that the median investment returns for the 20-25 year periods through the end of 2009 beat the most commonly used return assumption of 8%.
"Viewed in this context, compared to actual results, public pension plan investment returns assumptions have proven to be very conservative," the report said.
Trustees at the California Public Employees' Retirement System have asked their consultant and actuaries to review whether or not their 7.75% target was still reasonable, or if it should be lowered, given the recent market turmoil. The figure is regularly reviewed every three years but has stayed the same since 2003.
Spokesman Clark McKinley said at a board meeting this week, the scheme's general consultant said 7.75% was still a reasonable target, but the assumption will be reviewed this year as CalPERS carries out an asset allocation review.
Public pension funds in the US are supported by state or local governments, and when pension funds fall short of their return expectations, it could contribute to a deficit that the government typically needs to fund.
Since 1982, public pension funds have accrued US$4.4trn in revenues with 60% coming from investment returns, 27% from employer or government contributions and the rest from employee contributions.
Pension freedoms could generate as much as £1.9bn a year in tax revenue for the next 10 years, according to research by the Pensions Policy Institute (PPI).
The Pension Protection Fund (PPF) has conceded it does not have "all the data we need to calculate" the impact of last month's ruling that some benefits may be unlawful.
A looming court decision on gender equalisation of pension schemes could hit FTSE 100 profits by up to £15bn, Lane Clark and Peacock (LCP) says.
Dutch custodian KAS Bank has created a fintech solution to help schemes save on costs and improve transparency of currency hedging strategies.