Most public pension plans improved their funded status in 2014 and are likely to be more than 80% funded by 2018, according to a report released Friday by the Center for State and Local Government Excellence in Washington.
Authors Alicia Munnell and Jean-Pierre Aubry, director and assistant director of State and Local Research, respectively, at the Center for Retirement Research at Boston College, looked at 150 plans whose $3.2 trillion in assets represent 90% of public plan assets, and found their funded status improved to 74% from 72% the previous year.
State and local government officials also did a better job of making their annual required contributions, increasing to 88% of the ARC, up from 82% in 2013. “I think that's encouraging on a lot of levels,” Elizabeth Kellar, SLGE president and CEO, said in an interview. “Plan sponsors recognize that the only way to get on top of it is to pay their required contributions, and revenues are improving.''
It's encouraging, she said, that most plans are moving in a positive direction.
Mr. Aubry noted in an interview that plans have made many reforms in recent years. “The really big question is investment returns,” he said. The report's 2018 projections were based on baseline scenarios of the plans reaching their respective assumed rate of return, which averaged 7.6% among plans.
The report is available on the Center for State and Local Government Excellence's website.
