Contributions to public pension plans have increased in recent years, but their unfunded liabilities have increased more, according to an analysis by the Society of Actuaries released Wednesday.
Between 2006 and 2014, employer contributions increased 76%, up to $85 billion in 2014 from $48 billion, and employee contributions increased 30%, to $37 billion from $28 billion. Total unfunded liabilities increased 150% to $1 trillion in 2014 from $400 billion in 2006, and the plans studied were 73% funded by the end of 2014.
The SOA analysis used public data for 160 state and large city public pension plans covering roughly 27 million participants. It compared pension plan contributions to benchmarks that represent the contribution level needed to pay down unfunded liabilities or to satisfy a specific requirement.
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, known as negative amortization. In 2014, 72% of plans experienced negative amortization, up from 65% in 2006, while 3% of plans showed a funding surplus and 20% of plans received enough employer contributions to fund their shortfall within 30 years.
The study is available on the SOA's website.