WASHINGTON Dec 20 U.S. public pensions hit a
financial milestone in the third quarter of 2012, with their
total holdings and investments reaching the highest in more than
four years, Census data released on Thursday showed.
A rising stock market helped push their holdings to $2.8
trillion, up 2.6 percent from the preceding quarter and 10
percent from the third quarter of 2011. That was the highest
level since the second quarter of 2008.
According to the Census, corporate stocks rose 0.6 percent
from the second quarter to $949.2 billion, which was also 23.4
percent higher than the $769 billion in the third quarter of
The Census tracks the 100 largest state and local government
pension systems, which represent nearly 90 percent of public
pension financial activity.
International securities also rose from the prior quarter,
by 6.6 percent, to $540.9 billion, while corporate bonds
dropped 1.9 percent to $351.3 billion and U.S. Treasuries fell
1.7 percent to $245.7 billion.
Public pensions are short $757 billion to pay for future
benefits, according to Pew Center on the States.
Investments provide the lion's share of retirement system
revenues, with employers and employees also pitching in funds.
During the 2007-09 recession, the financial crisis caused those
investments to crumble just as states confronting collapsing
revenues cut their pension contributions and their staffs.
Pensions have slowly marched back to health since their
holdings reached a low of $2.1 trillion in 2009.
In the third quarter, they earned $108 billion on their
investments after losing $16 billion the quarter before and
losing $199 billion in the third quarter of 2011.
Employees, meanwhile, put in $8 billion in the third quarter
and governments - essentially taxpayers - contributed $19
billion. Both groups contributed less than in the second
Altogether, the retirement systems paid beneficiaries $54.6
billion in the third quarter, close to the record $55 billion in
payments made in the first quarter. Demand for benefit payments
will likely continue to rise in coming years as more members of
the Baby Boom generation retire.