Up Market Good For Taxpayers?

So the stock market is going gangbusters and the Dow has hit an all-time high last week—are city and county pension funds making a comeback? Will they recover from the recession and the collapse of the market when the recession started? Can local governments see any good news on how much they will have to pony up to keep the funds viable? Are local taxpayers out from under the threat of financial calamity?

A local expert notes that the assets of the pension funds are calculated on June 30, the end of the fiscal year. (They might fluctuate wildly if computed several times during the year.) If the market continues to do well, it will be good news for pension fund assets and may reduce the shortfall.

But not all pension assets are reflected by a record Dow number, and not all assets are in stock equities. A pension fund’s assets are diversified, some in the Dow, some in NASDAQ, some in other investment instruments like bonds or treasuries. So there is no direct correlation between a strong Dow and the actual assets of the pension funds. But the market going up is better for the pension funds than the market going down.

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