Funded Status of Local Pensions Inches Closer to States


Summary:

This issue brief examines the funded status of local government pension plans relative to states.

Author(s):
Jean-Pierre Aubry, Caroline V. Crawford, and Alicia H. Munnell
Publication date:
December 2017
Filed under:
Research Studies
Key findings:
  • Since 2001, the aggregate funded status of local pension plans has lagged behind that of state plans.
  • Since 2012, however, the gap between state and local funding has been shrinking due to two factors:
    • First, local plans continue to receive more of their required contributions than state plans and are a bit more likely to use stringent funding methods; and
    • Second, in recent years, local plans have earned stronger investment returns than state plans, perhaps partly due to a lower allocation to alternative investments.
  • Despite this progress, many local plans - like their state counterparts - still face significant funding challenges.
 
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