May 5 (Reuters) - U.S. public pension funds returned a median 1.87 percent in the first quarter of 2014, slightly outperforming the 1.66 percent returns for the larger universe of institutional investment plans, according to a report to be released on Monday.
The results this year are far below the first quarter of last year, when public pensions returned a median 5.2 percent.
However, the annual median return for public funds remains high, at 12.94 percent, after the first quarter of 2014, the data from the Wilshire Trust Universe Comparison Service showed.
Double-digit annual returns in 2013 began to give states' and cities' retirement systems a chance to start implementing reforms to fix gaping deficits.
Wilshire's report covers nearly 1,700 different plans - including foundations, endowments and corporate funds - representing more than $3.5 trillion in assets.
"While this is the third positive quarter in a row, returns remain below the classic 1.82 percent or higher quarterly return target required for an annualized 7.5 percent return," said Wilshire Managing Director Robert Waid, referring to the overall results.
By comparison, the Wilshire 5000 Total Market Index returned 2.04 percent, while the Barclays U.S. Aggregate Index returned 1.84 percent for the quarter. (Reporting by Hilary Russ in New York; editing by Matthew Lewis)