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January Pension Report
- By Ray Sanderson
- Published 01/5/2010
- Pension Watch
The Public Fund Survey is an online compendium of key characteristics of the nation's largest public retirement systems and is sponsored by the National Association of State Retirement Administrators and the National Council on Teacher Retirement for the purpose of increasing knowledge and understanding of the public pension community.
A Summary of Findings is conducted annually to provide an objective overview of overall plan financing, membership and design within these systems. This year's Summary is the first following the sharp drop in global investment markets that occurred in 2008.
As expected, State and local retirement systems have sufficient assets set aside, even after the market downturn, to continue paying promised benefits for decades. However, in the wake of this unprecedented decline, most are in the process of examining benefit levels, financing structures and asset allocations to rebuild reserves and ensure sustainability well beyond that time period.
While State and local government employee retirement systems have a long time horizon that allows for a patient and metered approach, the uniqueness in plan design, benefit structure, and governance arrangement between systems will require diversified responses among them.
The fall in asset values has caused aggregate funding levels to move downward from 86.7 percent in Fiscal Year 2007 to 85.3 percent in Fiscal Year 2008. Because public pension actuarial methods are designed to temper the effect of market volatility, public pensions will recognize the investment losses incurred in 2008 over several years.
During this recognition period, funding levels are expected to decline, although losses may be partially offset with investment gains. Future funding levels will also be influenced to the extent sponsoring state and local governments consider adjustments to benefit levels and financing arrangements, such as reduced benefits for future hires, reduced future accruals, and/or higher contributions for both employers and employees.
You can view the entire report in PDF format.
A Summary of Findings is conducted annually to provide an objective overview of overall plan financing, membership and design within these systems. This year's Summary is the first following the sharp drop in global investment markets that occurred in 2008.
As expected, State and local retirement systems have sufficient assets set aside, even after the market downturn, to continue paying promised benefits for decades. However, in the wake of this unprecedented decline, most are in the process of examining benefit levels, financing structures and asset allocations to rebuild reserves and ensure sustainability well beyond that time period.
While State and local government employee retirement systems have a long time horizon that allows for a patient and metered approach, the uniqueness in plan design, benefit structure, and governance arrangement between systems will require diversified responses among them.
The fall in asset values has caused aggregate funding levels to move downward from 86.7 percent in Fiscal Year 2007 to 85.3 percent in Fiscal Year 2008. Because public pension actuarial methods are designed to temper the effect of market volatility, public pensions will recognize the investment losses incurred in 2008 over several years.
During this recognition period, funding levels are expected to decline, although losses may be partially offset with investment gains. Future funding levels will also be influenced to the extent sponsoring state and local governments consider adjustments to benefit levels and financing arrangements, such as reduced benefits for future hires, reduced future accruals, and/or higher contributions for both employers and employees.
You can view the entire report in PDF format.
