U.S. Public Pension Plan Contribution Indices, 2006–2014

June 2017

This study explores contribution indices—metrics developed by the SOA that compare pension plan contributions to benchmarks that represent the contribution level needed to pay down unfunded liabilities—for contributions among 160 state and large city public sector pension plans in the United States. Using the assets and liabilities reported under Government Accounting Standards Board (GASB) guidelines for financial disclosure, the study spans 2006–2014. Key observations include:

  • For 130 plans with consistently viable data for this study over 2006–2014, total unfunded liabilities as reported under GASB guidelines increased about 150% from about $400 billion in 2006 to approximately $1 trillion in 2014, while liabilities increased 47%, from about $2.5 trillion to roughly $3.7 trillion.
  • In every year studied, most of the 160 plans with enough data to complete analysis for the year received insufficient employer contributions to maintain their unfunded liabilities—they experienced negative amortization. In 2014, 72% of plans experienced negative amortization, up from 65% in 2006.
  • Many plans with negative amortization contributed at least as much as their target contribution.1 However, at the peak in 2010, 76% of target contributions entailed negative amortization. By 2014, the percentage fell to 67%, roughly the same level as 2006.
  • For 2014, 3% of plans showed a funding surplus, and 20% of plans received enough employer contributions2 to fund their shortfall within 30 years without it growing through negative amortization in the meantime.
  • Employer contributions for the same 130 plans increased 76%, from about $48 billion in 2006 to roughly $85 billion in 2014. Employee contributions increased 30% during this period, from $28 billion to $37 billion, while payroll and prices both increased 17%.3



U.S. Public Pension Plan Contribution Indices, 2006–2014


Thank You

Thanks to the following individuals for their advice and arm’s-length review of this study prior to publication. Any opinions expressed may not reflect their opinions or those of their employers. Any errors belong to the authors alone.

Randall J. Dziubek, ASA, EA, MAAA

David W. Vanderweide, FSA

Amy Williams, ASA, FCA, MAAA

Questions or Comments?

If you have comments or questions, please email research@soa.org.

1 This study uses the term “target contribution” to represent the Actuarially Determined Contribution as defined by GASB Statements 67 and 68 for years starting with 2014, and the Annual Required Contribution as defined by GASB Statements 25 and 27 prior to 2014.

2 For this study, employer contributions include contributions from all sources other than employee contributions. The study isolates employer contributions because state law typically defines employee contribution rates, whereas employer contributions are typically more flexible.

3 Prices are measured by the annual average Consumer Price Index for All Urban Consumers (CPI-U).