Published on 11/24/2009

A lot of folks have seen doom and gloom in the recession we just past through. I thought it was important to get a historical perspective on this issue. We have had worse times that the last recession. We may have more. But the bottom line is how things have done in the long term. The table in this article shows the historical rate of return on pension investments.

The rates of return shown below represent the change in asset value for the retirement funds managed by the Washington State Investment Board as the Commingled Trust Fund (CTF).

Rates of return for years prior to 1982 are simulated based on the fund's 2004 asset allocation strategy and the historical performance of selected economic indicators. See Table B for more information. Rates of return for 1993 and beyond have been restated to match the Washington State Investment Board's (WSIB) reported returns.

Investment Returns of the Commingled Trust Funds¹
Year	ROR	Year	ROR	Year	ROR
1926	8.19%	1956	1.45%	1986	26.90%
1927	24.03%	1957	-4.44%	1987	16.90%
1928	27.35%	1958	29.44%	1988	4.20%
1929	-11.37%	1959	7.69%	1989	13.50%
1930	-15.60%	1960	3.88%	1990	8.30%
1931	-29.72%	1961	18.90%	1991	9.50%
1932	0.43%	1962	-3.29%	1992	8.20%
1933	51.03%	1963	15.12%	1993	13.07%
1934	7.87%	1964	13.11%	1994	2.10%
1935	31.46%	1965	12.87%	1995	16.24%
1936	29.26%	1966	-5.11%	1996	16.49%
1937	-25.42%	1967	22.62%	1997	20.18%
1938	22.05%	1968	11.63%	1998	17.12%
1939	1.70%	1969	-10.60%	1999	11.76%
1940	-3.62%	1970	4.52%	2000	13.56%
1941	-6.18%	1971	13.87%	2001	-6.75%
1942	18.00%	1972	11.88%	2002	-5.15%
1943	27.85%	1973	-11.99%	2003	3.02%
1944	19.61%	1974	-15.33%	2004	16.72%
1945	32.02%	1975	30.50%	2005	13.05%
1946	-5.39%	1976	27.27%	2006	16.70%
1947	1.87%	1977	1.20%	2007	21.33%
1948	3.57%	1978	6.77%	2008	-1.22%
1949	13.81%	1979	14.87%	2009	-22.84%
1950	21.58%	1980	20.45%	2010	13.21%
1951	11.15%	1981	0.22%
1952	9.83%	1982	2.50%
1953	-0.25%	1983	47.30%
1954	36.83%	1984	-0.03%
1955	17.84%	1985	29.80%
1 Returns are calculated for fiscal years ending June 30 as reported by the Department of Retirement Systems' Comprehensive Annual Financial Report. These results may differ from those reported for valuation years, which end September 30. Rates of return for 1993 and beyond have been restated to match the WSIB' reported returns.
2 Rates for years prior to 1982 are approximations. See Table B for more information.

Source: State Actuary

Table B

Prior to the creation of the Washington State Investment Board (WSIB) in 1982, investment of the retirement funds was the responsibility of separate retirement boards. Consequently, no comprehensive rate of return was recorded in those years.

Historical returns were developed by combining the performance of major asset categories in the same proportion as the asset allocation below.

Asset Allocation¹
Asset Class	Allocation	Indicator of Economic Performance
U.S. Equity	31%	S&P 500
Non-U.S. Equity	15%	S&P 500
Fixed Income	25%	Average of long-term corporate & government bond index
Private Equity	17%	U.S. small cap stock index
Real Estate	12%	Average of long-term corporate & government bond index
1 Adopted November 2001.