Locally administered pension plans were funded just as well as state-administered plans and had funding strategies that were as good as or better than state plans, according to a new Center for State and Local Government Excellence issue brief.
In a comparison of 2006 data from 84 local plans with data reported in the 2006 Public Fund Survey prepared by the National Association of State Retirement Administrators and the National Council on Teacher Retirement, the aggregate funding ratio for the local plans was 85% and 84% for the state plans.
Local plans had a better track record of making their required contribution, with 69% making the contributions vs. 54% of the state plans.
The results presented in this brief are surprising. Based on press accounts, our expectation was that locally administered plans would be significantly less well funded than those administered by the state. This expectation did not prove to be correct, wrote co-authors Alicia H. Munnell, Jean-Pierre Aubry and Kelly Haverstick of the Center for Retirement Research at Boston College. However, with recent economic troubles, state and local governments are under greater pressure in 2008 than in 2006, so funding levels may have deteriorated, they wrote in the brief for the Washington-based center.
The brief The Funding Status of Locally Administered Pension Plans, is available at http://tinyurl.com/thefundingstatus.