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What percentage of US stocks are held by pension plans and personal retirement accounts?
Futurecast claims 40% of US stocks are held by these institution. Is this accurate. Is 70% ownershiper of the stockmarket held by mutual funds, insurance companies, and private equities?
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A specific percentage number is difficult to come by, since the market is constantly fluctuating and the companies behind pension plans and personal retirement accounts have been actively moving funds as of late. The 40% number you cited seems fairly accurate, although I can't be certain when it was from. According to an article from November of 2007 (Quoting from The Wall Street Journal) :
"Several of the largest public pension funds have been selling billions of dollars held in U.S. stocks, and others are expected to join in. In most cases these actions are unrelated to the recent market jitters, though worries about the economy, the weakening dollar and the credit crisis could be accelerating these moves. More broadly, they are part of a long-term plan to reduce stock holdings in U.S. companies to help fund other investments...One plan calls for Calpers (California Public Employees' Retirement System - the largest public pension fund) to reduce its U.S. stock position to 24%, from 40% of its portfolio, which would represent the fund's lowest allocation to U.S. stocks in more than 20 years. Calpers' board will consider the measure next month.
While some public pension funds are bucking the trend by keeping their U.S. stock holdings steady, industry consultants said the clear majority -- many still wary of the stock market selloff at the start of this decade -- are cutting back. “This is a long-term systemic trend,” said Cynthia Steer, chief research strategist at Rogerscasey, a Darien, Conn., consulting firm. “It isn't going to turn around soon.”"
This article implies that many pension plan companies are attempting to reduce the percentage of their holdings in the stock market as part of an overall trend. Given the recent instability of the U.S. stock market, I can only infer that the managers of pension plans and personal retirement accounts would likely continue to decrease their stock market holdings.
AllBusiness also has an in depth look at "State and local pension plans' equity holdings and returns," although the report is from 2000.
"Several of the largest public pension funds have been selling billions of dollars held in U.S. stocks, and others are expected to join in. In most cases these actions are unrelated to the recent market jitters, though worries about the economy, the weakening dollar and the credit crisis could be accelerating these moves. More broadly, they are part of a long-term plan to reduce stock holdings in U.S. companies to help fund other investments...One plan calls for Calpers (California Public Employees' Retirement System - the largest public pension fund) to reduce its U.S. stock position to 24%, from 40% of its portfolio, which would represent the fund's lowest allocation to U.S. stocks in more than 20 years. Calpers' board will consider the measure next month.
While some public pension funds are bucking the trend by keeping their U.S. stock holdings steady, industry consultants said the clear majority -- many still wary of the stock market selloff at the start of this decade -- are cutting back. “This is a long-term systemic trend,” said Cynthia Steer, chief research strategist at Rogerscasey, a Darien, Conn., consulting firm. “It isn't going to turn around soon.”"
This article implies that many pension plan companies are attempting to reduce the percentage of their holdings in the stock market as part of an overall trend. Given the recent instability of the U.S. stock market, I can only infer that the managers of pension plans and personal retirement accounts would likely continue to decrease their stock market holdings.
AllBusiness also has an in depth look at "State and local pension plans' equity holdings and returns," although the report is from 2000.
source(s):
http://www.directorship.com/pension-funds-pull-back-stocks
http://www.allbusiness.com/accounting/3493014-1.html
http://www.directorship.com/pension-funds-pull-back-stocks
http://www.allbusiness.com/accounting/3493014-1.html
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How much are State and Local pension funds underfunded?
1. 1999, State and local pensions totaled about $3 trillion and equities makeup 67 percent of the fund.
2. 80 percent of the state and local pensions holdings were domestic equities.
3. Returns on equity for 10 years period was more than 17 percent for both private and state pension plans.
5. Total financial assets for 2,140 state and local pension plans was over $3 trillion that year
6. From 1982 to 1999, the market value of state and local pension plans' aggregate equity holdings increased about 3,300 percent, while the value of the entire U.S. equities market increased by about 1,100 percent
7. State and local pension plans are the third largest group of institutional investors.
8. Maryland Counties devour 40% of State budget on Pensions
9. Tennessee Public Employee Pension lost $5 billion
10. New Mexico public Pension fund lost $5 billion
11. Michigan public employee pensions may have lost $2 billion
12. New Hampshire liability for public employee pension totals more than $7 billion.
13. Maryland's Pensions Lose $600 Million
14. Colorado's State Workers Pension faces $13 Billion Loss
15. The California Public Employees’ Retirement System is the largest national pension with $232 billion in assets.
16. Florida public employee pension is the fourth largest pension at $125 billion.
17. IBM UK Pension Plan
18. Oregon Public Employees Retirement Fund has $54.3 billion in its portfolio
19. University of Virginia Investment Management has $4 billion endowment fund
20. The 8% annual return on investment in your pension fund is optimistic.
21. Consumers and banks are trying to shed debt. Huge financial entities are selling their stocks and commodities to raise funds to stave off bankruptcy.
22. The available returns from the market has been lower than expected or understood. Returns have been flatten by debt. Pension returns could drop down to 4 percent.
23. In 2009, David Zion estimates that the pension funds of the S&P 500 companies could be $362 billion underfunded, a drop of $420 billion in the year.
24. Ford’s pension plan is short $4 billion.
25. State and local government pension plans nationwide are underfunded by at least $450 billion and could go as high as $700 billion, says Brian Beck.
26. The Pension Benefit Guaranty Corporation (PBGC) collects premiums to be used as insurance to pay benefits to workers whose employers close or file bankruptcy. More corporations are filing for bankruptcy to shed their pension plans and letting PBGC take over. PBGC pays out a maximum annual benefit of $45,000. PBGC is currently $23 billion in the red and will require a $100 billion in taxpayer money over the next 20 years.
27. If any state or local government cannot pay benefits for its pension members, the municipality must raise taxes. If the tax burden becomes to great, the federal government must step in.
28. Wilshire Associates found 54 of the 64 of state and local pension plans were underfunded (85%), for $175 billion.
29. The State of Illinois Pension fund is $38 billion underfunded.
30. Most state constitutions forbid public entities, even prospectively, from reducing the rate at which employees accrue benefits.