Massive Losses for Public Pension Funds After Collapse of Silicon Valley Bank

The collapse of Silicon Valley Bank, the 16th largest bank in the U.S., has resulted in massive losses for public pension funds around the world.^[0] Retirement funds in Ohio, North Carolina, and California all reported losses of millions of dollars due to their investments in the failed bank.

The Ohio State Teachers Retirement System (STRS) reported $27.2 million in losses, making it the hardest hit pension fund in the U.S.^[1] The California Public Employees Retirement Fund (CalPERS) had $67 million invested in Silicon Valley Bank, while the Employee Retirement System of Rhode Island (ERSRI) had $2.6 million.^[2]

The Employee Retirement System of Rhode Island (ERSRI) had invested in Silicon Valley Bank as part of the Russell 3000 index in the U.S. public equity area.^[3] North Carolina revealed it had roughly $9.9 million in exposure to Silicon Valley Bank and $7.8 million in exposure to Signature Bank stock.

The financial crisis has also impacted a Swedish pension fund representing over 2.6 million people with over $1.1 billion invested in Silicon Valley Bank and Signature Bank. Magnus Billing, the CEO of Alecta, said the investments were a “big failure” and that the fund would likely write off their holdings as a loss.^[4]

In response to the banking crisis, the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation have taken collective action to help mitigate the situation.^[5] Continually, STRS Ohio is keeping tabs on and evaluating the repercussions of these advancements.^[1]

The massive losses suffered by public pension funds are causing lawmakers to demand answers and action with regards to banking regulation.^[6] Many argue that pension funds should invest in safe indexes and not hedge funds and private equities. As the investigations continue, it remains to be seen how the government will respond and what measures will be taken in the future to protect pension funds from similar crises.

0. “Illinois Municipal Retirement Fund invested in now-collapsed Silicon Valley Bank” Illinois Policy, 15 Mar. 2023, https://www.illinoispolicy.org/illinois-municipal-retirement-fund-invested-in-now-collapsed-silicon-valley-bank

1. “Ohio State Teachers Retirement System Had Massive Investment in Silicon Valley Bank” Cleveland Scene, 15 Mar. 2023, https://www.clevescene.com/news/ohio-state-teachers-retirement-system-had-massive-investment-in-silicon-valley-bank-41599459

2. “Colorado's public pension fund loses millions in SVB collapse – Denver Business Journal” The Business Journals, 15 Mar. 2023, https://www.bizjournals.com/denver/news/2023/03/15/colorado-pera-silicon-valley-bank-losses.html

3. “Pensions Lose Millions After Bank Collapse” Newsweek, 13 Mar. 2023, https://www.newsweek.com/pensions-lose-millions-after-svb-collapse-1787476

4. “Pension funds report millions in losses amid financial crisis” ABC News, 17 Mar. 2023, https://abcnews.go.com/US/pension-funds-report-millions-losses-amid-financial-crisis/story?id=97932375

5. “‘Aggravated’: Silicon Valley Bank collapse hits close to home for retired Ohio teachers” WDTN.com, 16 Mar. 2023, https://www.wdtn.com/news/ohio/aggravated-silicon-valley-bank-collapse-hits-close-to-home-for-retired-ohio-teachers/

6. “Ohio teachers retirement fund takes massive hit in Silicon Valley Bank collapse” WDTN.com, 16 Mar. 2023, https://www.wdtn.com/hill-politics/ohio-teachers-retirement-fund-takes-massive-hit-in-silicon-valley-bank-collapse