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Public Pensions See Drop in Assets

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Anyone who has a retirement or pension plan knows they have substantial investments in financial markets and that their earnings are very dependent on changes in market performance.

So, what effect did the 2008 market decline have on our public employee retirement systems?

The Census Bureau’s 2009 state and local public retirement systems statistics (July 1, 2008, to June 30, 2009) show that state and local public employee retirement systems lost over $726 billion in public pension assets, following a $176.7 billion drop the year before.

The results of the survey also show that most investment categories — which are all dependent on market strength — showed decreases. Corporate stocks, which comprise one-third of the total cash and investment holdings, saw a 29.8 percent decline, decreasing from $1.2 trillion to $808.9 billion.

The only categories showing increases were cash and short-term investments, mortgages, and real property, which all together only comprised 9.1 percent of all cash and investment holdings.

In short, the market decline of 2008 had a large impact on our government retirement systems. We will have to stay tuned to results from future surveys to see if the health of our state and local retirement systems recovers from the impact made in 2008.

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