Locally-Administered Pension Plans, 2007-2011


Despite having a better track record of paying the annual required contribution, locally-administered pension plans have not yet caught up with the funded levels of state-administered plans.

Alicia H. Munnell, Jean-Pierre Aubry, and Joshua Hurwitz of the Center for Retirement Research at Boston College
Publication date:
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Research Studies
Key findings:
  • 2011 data show that locally-administered pension plans continue to be slightly less funded than state-run plans – 72 percent vs. 76 percent.
  • This result is puzzling because local plan sponsors generally pay a larger share of their annual required contribution than state plan sponsors.
  • The explanation is that state plans have historically earned higher returns because they invest more in risky assets.
  • For mature plans with substantial assets, higher returns more than offset lower contributions.
  • During the financial crisis, though, local plans were able to narrow the funding gap because their less risky portfolios fared better.
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BC brief_Locally-Administered Pension Plans_13-162