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St. and Local Pensions

St. and Local Pensions

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Published by: Jbrownie Heimes on May 11, 2012
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State and Local Pension Plans Number 4, May 
RESEARCH
RETIREMENT
THE FUNDING OF STATE AND LOCALPENSIONS: 2011-201
By Alicia H. Munnell, Jean-Pierre Aubry, Josh Hurwitz, Madeline Medenica, and Laura Quinby*
* Alicia H. Munnell is director of the Center for Retirement Research at Boston College (CRR) and the Peter F. Drucker Professor of Management Sciences at Boston College’s Carroll School of Management. Jean-Pierre Aubry is the assistant director of state and local research at the CRR. Josh Hurwitz,Madeline Medenica, and Laura Quinby are research associ-ates at the CRR. The authors would like to thank Richard W.Kopcke for the macro projections and Keith Brainard for helpful comments.
Introduction
Th k mk h  p- pk, x h b,  p p h mpy b   wk /  b  w wk, y h      p p h  pp. Th  f w wh  h       h pb   mh      y,whh w y py m by  xp  by wh. B  mh,h   k mh b    h pm w, b  h pm  . I   hhhh mp   mh  h h  h k mk  h hy  , h
brief 
 p  p  h      p     p pj  hp -5.Th   z  w. Th  p h h     b  mp  6 p pp  75 p  .Th  , hw,  b  b by h xp -m y  p, hy 8 p. S h   b  h k ,  by m m
 for reporting purposes
,  hw       5 p. Thh  h m  ph    p’ pym   . Th phw h A Rq Cb (ARC)  5.7 p  py  ,  h p  ARC p pp  7 p. Th h LEARN MORESh  h pb  h p :
crr.bc.edu
 
C  Rm Rh
N:   h’ m.
Sources
: V   ;
Public PlansDatabase
(-);  Z (-).
Figure 1. State and Local Pension Funded Ratios,1994-2011
103%88%84%79%76%75%0%40%80%120%1994 1998 2001 2003 2005 2007 2009 2011
pj   -5  hw h, h m ky  h k mk , h   w m y x y,b h y   8 p by 5. Thh  b   h  hk  mp . Th   - h,  h h m, h p   pb p p y  h wyh  mh . B  h mh-,  w hw  mpm x y,b h,   mk   p, h pb p p w k b.
Funded Status in 
I , h m     b   mp   -mp  7 y m p, b GASB  mh, w 75 p.
(Th -  h  p pp  h Appx).Th  w hy w h h p y,b by bw h hh    h   y  ( F ). Fm hm-  ,  mp mky  -p  GASB      kmk. I ,  m  3 p  b. Wh h b  h h bbb  h  h y,   pp  y  w   p h hh  m h. F h bz wh h -p  k p, whh pk  7. B h p    8 h      .B y b h   mp  6p p h   by y My, h      m. A p y,  h p wh ,  pj   p-by-p b  h p b  h .
Appy-  mhy py  h pp mb  p y h pymh pbh    h h  h m wh  p  h h h. Lb-  pj b  h    wh p y p. Th  m   b w h   h pm  y   wp. Th p    mp  p     y . I h, h     m $.7 ,  b m  $3.6 ,p     75 p.Th   h h    m     h b w  h. Th wh  b w by , pp  3. p m .6 p   b 6 p   y. O h hh, h     h y m-y. Th xp  h w wh   h    mh h f mk  by  y   -yp ( F ). S wh mk    w y hh h  , hy wy hy hh h  6, h y p h -y m .
N:   h’ m.
Sources
: V   ; 
Public PlansDatabase
(-).
Figure 2. Actuarial vs. Maret Value o Stateand Local Pension Assets, 2001-2011, Trillions
$2.6 $2.6$2.7$2.52.12.32.6$0$1$2$32001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Actuarial assetsMarket assets
 
I  B 
3
I ,    y,   mp y by. F 3 hw h b-     mp  p. Sxy-p  p h   bw 8 p-. Ahh my  h py- p y m,   p, h  h I (SERS, Th,  U)  C- (SERS), h   bw 6 p.
Sources
: V   ;  h’ m h
Public Plans Database
().
Figure . Distriution o Funded Ratios orPulic Plans, 2011
2.4%15.1%46.8%30.2%5.6%0%10%20%30%40%50%20-39 40-59 60-79 80-99 100+
F 
Funded Status with Riskless Rate
Th   p b w GASB’  whh b   byh xp -m y  h  h  hp , hy 8 p. S hy, hw,  h
 for reporting purposes
  m  pym h b    h f h k.
3
I h     p p, h k  h y bwhh pym w   b m. S hb  p  m  w, h -m   h b h pym  .A  h   h wk  h , b   wk   hb     by p h -- jm. Nh,  b wm y b p,  b –  ppp – h b  by mh  h k-  .
F  hw h   b  mp  6 p    . I, h  by w $3.6 , -   yp    8 p (hhm p h b  w h ). A    5 p  pb - b  $5. .
N: Th $3.6    h   h b  p   mp, whh –   –      b 8 p.
Source
: V   ;  h’ m h
Public Plans Database
().
Figure 4. Aggregate State and Local PensionLiailit under Alternative Discount Rates, 2011,Trillions
$3.6$4.7$5.4$6.4$0$1$2$3$4$5$6$78% 6% 5% 4%
R h b  h p  5p   p     5 p,$.7     (h m  ) mp  $5.   b. Th   8-p by  5-p byw pp y      y ( F 5).
N: Ah’ m.
Sources
: V   ; 
Public PlansDatabase
(-).
Figure . State and Local Funded Ratios itLiailities Discounted  Risless Rate, 2001-2011
68%63%60%58%57%57%58%56%53%51%50%0%20%40%60%80%2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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