Public pension plan officials are feeling more confident about plan sustainability and retirement readiness, said a survey released Monday by the National Conference on Public Employee Retirement Systems.
NCPERS and Cobalt Community Research surveyed 187 state, local and provincial public pension funds in the U.S. and Canada with total assets of $1.8 trillion. Of those, 81% are local pension funds and 19% are state funds. Respondents’ overall confidence rating measured 7.9 out of 10, up from 7.8 in 2013.
Since 2013, the average funding level of the plans rose to 71.5% from 70.5%, due to average one-year investment returns of 15% for their 2014 fiscal year and lower amortization periods, NCPERS said. In addition, the pension funds surveyed made changes to ensure sustainability, such as increasing member contributions, tightening benefits and using actuarial rates of return.
The 2014 edition of NCPERS’ annual survey “provides convincing evidence” that most public pension plans are financially sound and well-funded, said Hank Kim, NCPERS executive director and counsel, in an interview. Next year, when market losses from the recession are no longer factored into public funds’ balance sheets, “the survey should show that we are doing incredibly well,” Mr. Kim said.
At an average 61 basis points to administer, “public plans are also very cost-effective,” Mr. Kim said.