U.S. Public Pension Plan Contribution Analysis
This study compares pension plan contributions to benchmarks that represent contribution levels needed to reduce unfunded liabilities of state-based and large-city public pension plans in the U.S. Key observations over 2003–2017 include (refer to the report for further explanation):
- Most of the plans studied received insufficient contributions to reduce their unfunded liabilities. In 2003, while still feeling the impact of the dot-com market crash, 55% of plans received insufficient contributions to reduce their unfunded liabilities. After reeling from 2008 market crash, the percentage of such plans peaked at 84% in 2011 before falling to about 63% for 2016 and 2017.
- Some plans received insufficient contributions to reduce unfunded liabilities measured as a dollar amount but received sufficient contributions to reduce unfunded liabilities measured as a percent of payroll. The percentage of plans in this group increased from 36% in 2003 to 77% in 2017.
- However, of plans whose contributions did not reduce unfunded liabilities as a dollar amount, more than half also fell short of the plans’ Actuarially Determined Contributions or other target contributions.
The authors thank the following volunteers for their wisdom, insights, advice, guidance and arm’s-length review of this study prior to publication. Any opinions expressed may not reflect their opinions nor those of their employers. Any errors belong to the authors alone.
Paul Angelo, FSA, EA, FCA, MAAA
William R. Hallmark, ASA, EA, FCA, MAAA
Thomas B. Lowman, FSA, EA, FCA, MAAA
Brian B. Murphy, FSA, EA, FCA, MAAA
Todd Nathan Tauzer, FSA, FCA, CERA, MAAA
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