The Funding of State and Local Pensions: 2015-2020
This brief tracks the changes in the funded status of state and local government pension plans between 2014 and 2015. It also discusses possible reasons for the slight changes observed and offers projected funded ratios for sample plans for 2016 through 2020. Key findings include:
- The funded status of public pensions increased from 73 percent in 2014 to 74 percent in 2015;
- One reason for the improvement is that plan sponsors paid a greater share of their Actuarially Determined Employer Contribution (ADEC), even though that contribution increased as a percentage of payroll;
- Employers paid 91 percent of their required contribution in 2015 compared with 86 percent in 2014;
- The growth in the rate of pension liabilities remained low, reflecting benefit cutbacks that were made in recent years; and
- While most pension plans are making slow, steady progress, and 38 percent are more than 80 percent funded, 20 percent of the plans are under 60 percent funded.