The funded status of state and local pension plans was unchanged in fiscal year 2013, according to a report issued Tuesday by the Center for Retirement Research at Boston College.
The sample of 150 pension funds found an estimated aggregate funding level of 72%, the same as in 2012. CRR researchers cited two reasons for lack of change. One factor was a drop in the funding ratio to 69% from 83% in 2012 for the $295.5 billion California Public Employees' Retirement System, Sacramento, which changed its asset valuation methods. Second, despite market upturns, the actuarially smoothed value of plan assets increased only 2%.
CRR analysts also found that the annual required contribution increased to 17.6% from 17.1% of payrolls, and the amount of the ARC paid increased to 83% from 81%.
Beginning in 2014, funding ratios will be based on current market values, under new Governmental Accounting Standards Board rules, “so recent stock market performance will provide a better clue as to changes in funding,” said the CRR report, which predicted that by 2017, assuming a healthy stock market, “plans should be at least 80% funded.”
