The Funding of State and Local Pensions: 2014-2018


Summary:

This 2015 report of state and local government pension funding finds that most public pension plans have improved their funded status. (6/14)

Author(s):
Alicia H. Munnell, Jean-Pierre Aubry
Publication date:
6/15
Filed under:
Research Studies
Key findings:
  • Most plans have improved their funded status in 2014, with the ratio of assets to liabilities increasing from 72 percent in 2013 to 74 percent in 2014.
  • According to the analysis, there are two reasons for these improvements: positive stock market performance for the past five years, allowing the 2009 negative equity returns to be replaced in plans that smooth their market gains and losses over five years; and higher payments of the annual required contribution by state and local governments increasing to 88 percent in 2014 as compared to 82 percent in 2013.
  • Going forward, assuming plans achieve their expected rate of return, the plans should be 81 percent funded in 2018.
  • If returns are lower, as predicted by many investment firms, funding will stabilize at about 77 percent.
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15-07 SLGE Funding of State and Local Pensions 2014-2018_web final