Forensics and the Future of a Connecticut Pension Plan

Source: Jean-Pierre Aubry and Alicia H. Munnell, Center for Retirement Research at Boston College, SLP#46, December 2015

The brief’s key findings are: 
– Connecticut’s State Employees Retirement System faces a large unfunded liability, despite recent efforts by the State to fund.
– A significant source of the liability is the “legacy debt” built up before the State began pre-funding its pensions in the 1970s.
– More recently, inadequate contributions, low investment returns (since 2000), and early retirement incentives have added to the problem.
– A promising approach for addressing the funding problem is to provide more breathing room in exchange for a real and sustained commitment to funding by:
– separately funding the legacy debt over multiple generations; while
– funding ongoing benefits using a stricter method for calculating required contributions, and reducing the long-term assumed return on plan assets.