I was reading about a popular pension used in Texas called Teacher's Retirement Statement. Their latest annual report had a loss of $16B on a line item called "Net Depreciation in Fair Value" (see page 4). This is frightening news of all the poor teachers in Texas because the pension only had a net value of $104B at the beginning of the year. Even more scary is the headline at the beginning of the report: "TRS Pension Fund experiences strong recovery". If a huge loss of net value is a recovery how will it hold up the economy continues to shrink? Would should teachers do to protect themselves?
First, the annual report is just that, a snapshot that shows value at the beginning and end of the period. Beginning = Aug 08 = $105B End = Aug 09 = $89B
Newsletter date May 10 = $96B
Odd they chose end of August as it's not even a calendar quarter end. The $16B was market loss during that period. Nearly half of that seemed to be recovered by the time this newsletter came out. The balance sheet also has to show deposits and payments made to existing retirees. I haven't looked at the S&P numbers for those dates, but my gut says this is right. The market tanked and the plan was down, but not too bad.
Protect? The PBGC guarantees pensions up to a certain limit. I believe that in general, teachers are below the limit and are not at risk of a reduced benefit. You do need to check that your plan is covered. If not, I believe the state would take over directly. I hope this helps.