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California's state and local government pension funds saw a 12.4 percent increase in their assets during 2010, according to a new Census Bureau report, markedly higher than the national pension fund increase.

The increase, from $458.8 billion in 2009 to $516.1 billion in 2010, marked a return to positive growth after pension funds in California and elsewhere were battered by investment losses during the national recession.

Nationally, state and local pension funds gained 10.6 percent in value during the year, rising to $2.7 trillion. California, with about 12 percent of the nation's population, holds nearly 20 percent of public pension assets. The state's pension funds, including the California Public Employees Retirement System, hold $373.7 billion in assets while local funds account for the remaining $142.3 billion.

The Census Bureau report also reveals that during the 2010 fiscal year, California's pension funds earned $63.1 billion on their investments and received another $23 billion in contributions from employees and government agencies while paying out $35.2 billion, including $33.1 billion in benefits.

Virtually all state and local pension funds have unfunded liabilities for future pension commitments, but the size of these shortfalls are in dispute since estimates depend on assumptions of future earnings.

Pension funds generally assume future earnings ("discount rate") in the 7-plus percent range but critics say that's unrealistically high. Lowering the assumption would raise the unfunded liability and increase pressure for more contributions from governments and their employees.



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