Industry News

On February 7, 2023, the National Conference of Public Employee Retirement Systems (NCPERS) released the results of its NCPERS 2023 Public Retirement Systems Study: Trends in Fiscal, Operational, and Business Practices. The annual comprehensive survey provides information on investment experience, actuarial assumptions, plan administration and operations, trends, innovations and best practices. 

Some of the key findings include: 

• During 2022, the average funding levels (the value of the assets in the pension plan divided by an actuarial measure of the pension obligation) increased. Average funding levels rose to 77.8% in 2022 from 74.7% in 2021. 
• Of the reporting pension systems, investment returns were the most significant source of revenue at 68% of overall pension revenues while employer contributions totaled 24% and employee contributions totaled 8%.
• In 2022, the average investment return assumption was 6.86% compared with 7.07% in 2021.
• Overall, the reporting funds experienced solid returns. On average, 20-year returns were 7.4%, 10-year returns were 9.0%, 5-year returns were 9.7%, and 1-year returns were 11.4%. 
• Of those reporting funds that offered a cost-of-living adjustment (COLA) for members, the average was 2.0% in 2022 as compared with 1.7% in 2021.
• The overall average expense for administering the funds was 64 basis points (or 64 cents per $100 invested).

The survey included 195 state and local government pension funds with more than 19.6 million active and retired members and total assets exceeding $3.0 trillion in actuarial and market value.  Of the pension funds surveyed, 56% were local government funds and 44% were state pension funds.  

The report is available here.