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Publicly-funded plans with more than $1 billion in assets generated a median return of 6.79 percent in the 12 months that ended on June 30, according to data from Wilshire Analytics provided exclusively to The Wall Street Journal. Public pension plans expect to generate a median return of 7.25 percent, which means the past year fell short of expectations – for the first time since 2016, as noted by the publication.
All-plan median returns for the year ending June 28 were 6.47 percent.
“For the one year ending in June of 2019, market volatility and active management worked against all plan types,” Jason Schwarz, president of Wilshire Analytics and Wilshire Funds Management, said in a statement. “Changes in investor and economic sentiment over the past year resulted in unforeseen outcomes for many active managers.”
The decline in funding was the result of increased liability values, which were partly offset by a rise in asset values.
Wilshire also reported that large plans outperformed small for the year ending in June 2019, but they underperformed foundations and endowments owing to greater equity exposure.
According to data from Deutsche Bank Research, defined pension contributions were the most common way American workers saved for retirement – with more than 50 percent of savers saying they were using this method.
Overall, however, 42 percent of Americans reported having no retirement savings at all, according to a 2018 survey from the Center for Financial Services Innovation.
Former Speaker of the House John Boehner has spoken out in recent weeks regarding multiemployer benefit plans. More than 100 of these plans, covering about 1.3 million workers in the U.S., are expected to become insolvent within two decades.
“When you’ve got 10 million retirees whose pensions are on the line, Congress knows that this issue is important, they know that these multiemployer pension plans are woefully underfunded … Congress really does in fact need to act,” Boehner told FOX Business’ Neil Cavuto last month.