Government contributions also reached highest level on record
The record surge pushed total holdings and investments up 5.6 per cent from the final quarter of 2011, to US$2.8 trillion.
Total holdings and investments increased 0.7 per cent from the first quarter of 2011, according to the census, which has been keeping records on the country's 100 largest state and local government employee retirement systems' earnings since 1974.
"It looks like a strong quarter," said Keith Brainard, research director for the National Association of State Retirement Administrators. "We also have to remember markets go up and down, which illustrates the importance of keeping a long-term view. I suspect when the June 30 numbers come out, some of the gains that were experienced in the first quarter will be taken back."
The second quarter ends in a few days and the stock market has stumbled over the last three months. Brainard expects some of those declines to register among the pensions funds' investments and that "earnings for this quarter will be, at best, a wash or maybe down a little."
The census also found that government contributions, essentially the taxpayer dollars that go into pension funds, reached the highest level on record in the first quarter. They grew 12.7 per cent from the previous quarter and 14.5 per cent from the same period one year earlier, to US$24.2 billion.
Employee contributions, meanwhile, were US$9.3 billion.
Investments make up the lion's share of pension fund revenues, accounting for $6 out of every $10 in the funds, according to Pew Center on the States. The financial crisis caused earnings on the investments to plummet for three quarters in a row from the end of 2008 to the beginning of 2009. The value of pensions' holdings scraped the bottom at US$2.09 trillion in the first quarter of 2009.
Since then, their value has slowly inched closer to the US$2.93 trillion reached in the final quarter of 2007, before the recession devastated the retirement systems' balance sheets.
But the concerns are growing after the Pew Center on the States reported last week that the pension fund shortfall is now US$757 billion, nearly $US100 billion more than previously estimated.
The accounting board for state and local governments recently approved new standards for reporting pension finances that will make some retirement systems appear weaker.
Notably, it eliminated a process known as "smoothing," where pension systems spread the liabilities over time, making the funds more reactive to volatility in financial markets. Funds can still spread out expenses, but over a shorter time frame.