Industry News

On October 1, 2019, the Center for Retirement Research at Boston College (CRR) and the Center for State & Local Government Excellence (SLGE) released a new report, Update on the Funded Status of State and Local Pension Plans.  According to the report, the actuarial assets of state and local pension plans increased by 4.7% from $3.65 trillion in 2017 to $3.82 trillion in 2018 while liabilities increased by 3.8% from $5.05 trillion in 2017 to $5.25 trillion in 2018.  The larger percentage change in assets increased the funded ratio slightly from 72% in 2017 to 73% in 2018.

Other key findings include:

• Annual liability growth has steadily declined each year from 7.7% in 2002 to 3.8% in 2018; and
• Actuarial assets grew from -0.5% in 2002 to 4.7% in 2018.

The report concludes, “Fundamentally, the path of the funded ratio for public plans depends on the growth of actuarial assets relative to the growth of actuarial liabilities.  Liability growth slowed dramatically from 2001 to 2018, but still exceeded asset growth over the period – driving down the funded ratio from 103% in 2001 to 73% in 2018.  While more stringent funding methods would have modestly improved the trajectory of plan assets from 2001 to 2018, significant change requires also using a lower assumed rate.”

The report is available here.