State & Local Pensions: An Overview of Funding Issues and Challenges


Summary:

Using facts and charts, this primer shows how the 2008 economic downturn affected public pension funding levels and what to expect in the future. (1/13)

Author(s):
Center staff
Publication date:
January 2013
Filed under:
Primers
Key findings:
  • Unfunded liabilities increased from $0.7 trillion in 2009 to $0.9 in 2011; the value of pension assets remains at $2.7 trillion.
  • Aggregate funded ratios of pension plans declined from 84 percent in 2008 to 75 percent in 2011 as investment losses have been phased in. Funded ratios are expected to rise to 82 percent¬† by 2015.
  • The pace of retirement plan changes increased: 43 states enacted major changes between 2009 and 2011, most commonly to increase employee contributions and/or to establish a less generous tier of benefits for new hires.
Download publication:
2013 State & Local Pensions - An Overview of Funding Issues and Challenges

This primer lays out key facts about public pension plans, how they compare with the private sector, and what kinds of reforms are taking place to restore pension plan health.

Written for elected officials, the primer includes a brief description of the work of an independent Pension Funding Task Force, established by the national associations representing state and local governments to develop policy guidelines for how employers should calculate the annual required contribution.  The task force was established because the Governmental Accounting Standards Board (GASB) issued new pension accounting standards in 2012 that focus exclusively on how governments should account for pension benefit costs.