Key facts
- US public pension plans have reached their highest asset growth peak since the 2008 financial crisis.
- The majority of public pension plans recovered their pre-recession asset levels within six years.
- During the 2007-2013 period, public plans paid $1.4 trillion in benefits.
- Record asset levels for public plans reached nearly $6 trillion in the fourth quarter of 2021.
- Median assumed investment return for public pension plans has decreased from 8% to 7% since before the Great Recession.
- Nearly all large public plans have adopted generational mortality tables to account for increased longevity.
US public pension plans have achieved their highest growth peak since the 2008 financial crisis, demonstrating resilience in the face of market volatility. Following the severe economic downturn of the Great Recession (December 2007 to June 2009), which saw investors lose approximately a quarter of their assets, public pension plans experienced significant impacts. However, the majority of these plans successfully recovered their pre-recession asset levels within six years while continuing to disburse substantial benefits.
From 2007 to 2013, public plans paid out $1.4 trillion in benefits, a notable accomplishment that underscores their long-term viability. Recent data indicates that public pension assets reached a record high of nearly $6 trillion in the fourth quarter of 2021. This growth has occurred despite a shift towards more conservative assumptions, such as a reduction in the median assumed rate of return on investments from 8% before the Great Recession to 7% currently. This adjustment reflects market realities regarding future returns.
Furthermore, public pension plans have implemented structural changes to enhance their long-term sustainability. These include the widespread adoption of generational mortality tables, which incorporate projected increases in longevity, ensuring that future benefit payouts are accurately modeled. Many plans have also shortened their amortization periods for unfunded liabilities, aligning with actuarial community guidance for best practices. These strategic adjustments have strengthened the fundamental preparedness of public plans to navigate future market downturns.