Major Public Pensions Hit All-Time High of $3 Trillion

01-Apr-2014

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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By Jon Ogg, 247WallSt,

The U.S. Census Bureau has released data on year-end pension assets for 2013 from the 100 largest public employee pension systems in the United States. These systems account for 89.4% of all public pension assets, so this is a barometer for public pension systems as a whole. The new figure is a record of $3.061 trillion. By our take, the real news is in the securities allocations of government employee pension assets being much larger in international securities than government bonds.

Cash and security holdings rose by 4.2% from the third quarter, and they rose by 12.5% from the end of 2012.

A rising stock market aided these gains. Corporate stocks rose 5.9% from the third quarter to $1.12 trillion, while the increase was 18.1% from the end of 2012. Stocks also made up 35.1% of the total pension assets.

Corporate bonds posted rose in assets by 4.6% from the prior quarter to $337.0 billion, but that is a 1.3% decrease from 2012. Corporate bonds accounted for 10.6% of all assets.

International securities rose by 4.4% from the third quarter, up to $665.9 billion at year end. This was a 14.2% gain in value from 2012, and international securities now account for some 20.9% of all pension assets.

Federal government securities rose only 0.3% from the third quarter to $267.0 billion at the end of 2013. This was up by 5.9% from the end of 2012, and federal government securities comprised only 8.4% of the total pension cash and security holdings of major public pension systems.

The long and short of the matter is that U.S. public pension systems have 2.5 times as much tied up in international securities than they do in U.S. government bonds. Do the politicos realize this? Remember that these are public worker pensions; i.e. government employees.

Government contributions to employee contributions was at a 2.7-to-1 ratio in the fourth quarter of 2013.

By Jon C. Ogg

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