The Funding of State and Local Pensions: 2014-2018

Source: Alicia H. Munnell, Jean-Pierre Aubry, Center for State and Local Government Excellence, Issue Brief, June 2015

from the summary:
This 2015 report of state and local government pension funding finds that most public pension plans have improved their funded status.

Key findings:
• Most plans have improved their funded status in 2014, with the ratio of assets to liabilities increasing from 72 percent in 2013 to 74 percent in 2014.
• According to the analysis, there are two reasons for these improvements: positive stock market performance for the past five years, allowing the 2009 negative equity returns to be replaced in plans that smooth their market gains and losses over five years; and higher payments of the annual required contribution by state and local governments increasing to 88 percent in 2014 as compared to 82 percent in 2013.
• Going forward, assuming plans achieve their expected rate of return, the plans should be 81 percent funded in 2018.
• If returns are lower, as predicted by many investment firms, funding will stabilize at about 77 percent.