20 Looking solely at the average return of 6.4% and the funds’ collective ability to beat the 40/60 benchmark in six out of 10 years, one could draw the conclusion these funds are not doing too bad. But the real health of these funds can only be fully assessed by looking at other numbers not shown on this chart, such as the amount of liabilities which are currently funded by these assets and the number of active workers who are currently supporting retirees drawing pension payments. Both of these metrics are discussed elsewhere in this wrap-up, and they’ve only been getting worse over the past 10 years. CalPERS, the California Public Employees’ Retirement System, is one of the 170 public pen- sion plans included in the prior aggregate. With over $302 billion in plan assets, it is also the larg- est of these plans and one that is very well known and rather powerful as one of the largest stock market investors. For this reason, we thought it worthwhile to show CalPERS separately. CalPERS’ overall return in this 10-year period was 6.0%. This was below both the average of the collection of 170 state and local pension funds and also the 40/60 Portfolio. What is interesting is that CalPERS over-performed and under-performed the 40/60 Portfolio in all the same six and four years, respectively, as the collection of 170 state and local pension funds. But, given that CalPERS’ assets represent ap- proximately one-tenth of that overall collection, the correlation is not too surprising. Using data from OECD, the next three green bars show Canada, the United Kingdom and the United States. Canada’s average annual pension returns for 2007-2016 were 5.5% while the United Kingdom pensions returned 7.2%. However the US pensions returned 2.1%. Based on the OECD definition, this would include the 170 state and local pension funds in the Public Plans Data. With $3.8 trillion in assets, they should make up approximately 15% of the $25 trillion of the US pensions. If you look at indi- vidual annual returns during the 10-year period, US pension funds dropped by more than double compared to their OECD peers during the 2008- 2009 time frame. The implications are sobering for what this average implies about IRA and de- fined contribution returns over a period despite a US equity market performance that was much better than expected. One likely explanation for a portion of this underperformance is the fact that American individuals fear losses from the stock market (particularly as a result of the dramatic losses and corruption of the financial crisis) and therefore hold an unreasonably large portion of their IRA assets in cash, which provides effec- tively zero return, or fixed income significantly bringing down the overall average. Either way, there may be unfortunate–but understandable– explanations why America’s retirement asset rates of return significantly lag those of other more socialist counties where the retirement funds are effectively state-administered. Next in blue and tan are other OECD mem- bers: Australia, New Zealand, Netherlands and Switzerland with ten year average annual returns of 5.6%, 5.2%, 5.9%, and 2.7%. These are all beneath the benchmark, with the exception of Switzerland, significantly ahead of the United States. Finally we have added returns in orange for three Ivy League University endowments: Harvard, Yale and Princeton at 7.7%. 7.0% and 7.9%. and in grey for Berkshire Hathaway, Warren Buffet’s conglomerate, at 9.7%. Related Links • CalPERS • Harvard University endowment • Yale University endowment • Princeton University • Berkshire Hathaway • Pensions in Canada • Pensions in the UK • Superannuation in Australia • New Zealand Superannuation Fund • Pension system in Switzerland • Pensions in the Netherlands II. THE STATE OF OUR PENSION FUNDS