The Funding of State and Local Pensions: 2013-2017
This brief examines changes in the funded status of state and local government pension plans in 2013 to determine their degree of recovery from the 2008 economic downturn. It also offers projected funded ratios for sample plans for 2014 through 2017 under both the old and new Governmental Accounting Standards Board (GASB) standards. Key findings include:
- Despite a strong stock market, the funded status of public plans in 2013 remained unchanged at 72 percent for two reasons: actuarial smoothed assets grew modestly, and CalPERS, one of the nation’s largest plans, significantly revised its reported funded ratio.
- Funded levels among plans vary significantly.
- An encouraging sign is that many sponsors appear to be paying a larger share of their annual required contribution.
- There is slight improvement in 2013 at the top: 6 percent of plans are 100 percent funded or better; 28 percent are more than 80 percent funded.
- Going forward, the funded ratio is projected to gradually move above 80 percent, assuming expected stock market returns.