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.

NASRA Releases Results from National Survey of Public Pension

Public pension funding levels have declined according to this year’s Public Fund Survey, an annual overview of public pension plan financing, membership and design. This year's summary is the first following the sharp drop in global investment markets that occurred in 2008. The 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 (NASRA) and the National Council on Teacher Retirement.

According to the report, the 2008 fall in pension asset values has caused aggregate public pension funding levels to move downward from 86.7 percent in FY 2007 to 85.3 percent in FY 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.

The author anticipates that 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.

View the entire report by clicking here.

A lot of folks have seen doom and gloom in the recession we just past through.  I thought it was important to get a historical perspective on this issue.  We have had worse times that the last recession.  We may have more.  But the bottom line is how things have done in the long term.  The table in this article shows the historical rate of return on pension investments.

This article shows the projected payouts from the LEOFF 1 Pension system.  Did you know the system is still in surplus?  The surplus is still in excess of $400 million and the stock market continues to climb.  As of November 23rd, the DOW closed at 10,450.95 and was up 132 points today.  See the full article for details.

Have you ever wondered about the contributions to the LEOFF 1 Fund? 
Attached  is a chart from the Department of Retirement Systems called a Comprehensive Annual Financial Reports (1976 - 2000), Washington Law Enforcement Officers' and Firefighters' Retirement System Actuarial Valuations (1970-1975), showing the contribution history of the Employee, employer, and State contributions from Plan inception (1970) until contributions ceased (2000).

It is an interesting read because the state is always insisting they have put in over 77% of the money.  Of course when they make that arguement the forget to mention that they grandfathered in a lot of people who had made no contributions.  The also tend to forget to mention that they did not put in any money for the first 5 years.  The amount of the State's share would have been considerably smaller if they had funded it from the start.

Click here to view the file.

Matt Smith, the State Actuary made this presentation to the LEOFF 1 Medical Benefits Committee at the August 25, 2009 meeting. It is an interesting review that demonstrates how the pension funding is viewed actuarially.

The National Institute on Retirement Security on July 30, 2009, released a new study titled, The Pension Factor: Assessing the Role of Defined Benefit Plans in Reducing Elder Hardships.

The report finds defined benefit pensions, such as our own Washington State LEOFF 1 and LEOFF 2 retirement plans, besides being good for the members and their family, are a benefit to the community in general.

The National Institute on Retirement Security  published a February 2009 fact sheet based on 2006 information, which is the latest data compiled.

Expenditures made by retirees of state and local government provide a steady economic stimulus to Washington communities and the state economy. In 2006, 129,378 residents of Washington received a total of $2.35 billion in pension benefits from state and local pension plans, with $2.17 billion paid from plans within the state and the remainder originating from plans in other states.

The Center for State and Local Government Excellence has issued its first issue brief on retiree health benefits, “The Crisis in State and Local Government Retiree Health Benefit Plans: Myths and Realities.” The brief, written by Robert L. Clark, examines the current financial status of state retiree health plans.

Public pension plans have a unique ability to weather market declines according to an issue brief jointly published by two national public pension organizations. According to the National Association of State Retirement Administrators (NASRA) and the National Council on Teacher Retirement (NCTR), public pension plans are pre-funded over long time horizons. They use "shock absorption" and "prudent investment" to maintain long-term stability.

Shock absorption is accomplished by phasing in, or "smoothing" investment gains or losses, thereby softening the effects of short-term volatility. Sudden changes can be spread over several years, allowing governments to recognize market gains and losses more gradually. This allows plans to establish contribution rates that remain relatively level as a percentage of payroll from generation to generation of taxpayers.

Also, because they are funded over decades, public plans are able to establish long-term prudent investment strategies. They can regularly rebalance their portfolios and maintain diversified assets, thereby improving overall fund performance over time.

In fact, public pensions have survived extreme market conditions in the past. Through 2007, median public pension plan investment returns have been positive in 22 of the past 25 years. This period includes the market crash of 1987, the 1990-91 recession, the bursting of the dot-com bubble, 9/11, and Enron and WorldCom.

To view the entire issue brief from NASRA and NCTR you may click on the attached PDF.