2022 was bust for many pension plan investment returns

By TOM GANTERT THE CENTER SQUARE MANAGING EDITOR

(The Center Square) — Municipal pension plan investment returns were a “wild roller-coaster ride” in 2021 and 2022 with boom or bust results over that two-year period.

Many cities reported recordsetting returns in 2021 as high as 33.7% only to find negative returns in 2022. The swing meant billions of dollars to many municipalities’ pension funds.

Truth In Accounting released its annual Financial State of Cities 2023 report in February.

The city of San Francisco was ranked as the second best of the

75 major cities reviewed.

That’s largely because the San Francisco Employees’ Retirement System (SFERS) investment returns were 35% in 2021 and brought in $9.4 billion in investment income.

Truth In Accounting said that influx of money turned the system’s $5.4 billion in underfunding to $2.6 billion overfunded and was a major reason the city moved from 67th to second in one year.

The city of Los Angeles went from 44th best city in 2021 to fourth best city in 2022 based on the strength of strong investment returns. The Los Angeles Fire and Pension System had 32.6% returns on investments in 2021 and went from $2.6 billion underfunded to $2.7 billion overfunded.

But the more recent rates of return have been reversed, according to Truth In Accounting.

The Los Angeles Fire and Police Pension had investment returns of -7.2% in 2022.

And municipal pension systems around the country incurred similar results.

The Atlanta Firefighters’ Pension Plan experienced the biggest swing in two years that Truth In Accounting could uncover, reporting an unrealized gain of 33.28% in 2021 and a loss of 14.72% in 2022.