Author
Listed:
- Jean-Pierre Aubry
- Caroline V. Crawford
- Alicia H. Munnell
AbstractThe aggregate funded status of state and local pension plans declined in fiscal year (FY) 2016, because liabilities continued to grow steadily while poor stock market performance led to slow asset growth. Thus, the ratio of assets to liabilities fell whether measured by the old Governmental Accounting Standards Board standard (GASB 25), which uses a smoothed value of assets, or by the new standard (GASB 67), which values assets at market. While the new standard has been in effect since 2014, m ost plans also still report numbers under the traditional rules. As such, this brief provides a multi-year comparison of the two approaches. The discussion is organized as follows. The first section reports that the ratio of assets to liabilities for the 170 plans in the Public Plans Database decreased from 73 percent in 2015 to 72 percent in 2016, as measured by the traditional GASB standard; and from 73 percent to 68 percent, as measured by the new standard. The second and third sections separately evaluate the changes in assets and liabilities, respectively. The fourth section shows that, for the sample as a whole, both the required contr ibution and the percentage of required contribution paid have remained relatively constant since 2015. The fifth section projects funded ratios for our sample for 2017-2021 under two scenarios of investment performance. Even though 2017 has been a very good year in terms of market returns, plan funded ratios are projected to grow only modestly by 2021 even if plans achieve their assumed returns (currently 7.6 percent on average). The final section concludes that, in order to see more meaningful improv ement in funded levels going forward, plans need to set and pay a more sufficient actuarially determined employer contribution, in addition to achieving their assumed returns.
Suggested Citation
Jean-Pierre Aubry & Caroline V. Crawford & Alicia H. Munnell, 2017.
"State and Local Pension Plan Funding Sputters in FY 2016,"
State and Local Pension Plans Briefs
ibslp56, Center for Retirement Research.
Handle:
RePEc:crr:slpbrf:ibslp56
Download full text from publisher
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crr:slpbrf:ibslp56. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Amy Grzybowski or Christopher F Baum (email available below). General contact details of provider: https://edirc.repec.org/data/crrbcus.html .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.