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The 'Public Pension Crisis' Is a Myth, Part Eight

"The proposed change [to an Actuarial Standard of Practice (ASOP)] would require actuaries to calculate ... a 'defeasement number' for public pension plans. [This] is basically what it would cost, in total, for an employer to close its plan and pay an insurance company to take care of its pension obligations ... [T]his is a meaningless number for almost all public plans, as they are neither closing their plans nor selling them to insurance companies."

Why Do Public Pension Boards Matter?

"Public pension boards look slightly different in each state, but they are typically made up of individuals with years of experience in investment, public finance, and public management. The median number of board members is nine, but it can be as few as five and as many as nineteen. As fiduciaries of the fund, they are responsible for looking out for the best interests of the workers and retirees that will rely upon the pension for their retirement security. Unfortunately, political meddling can sometimes interfere with the professional expertise of the pension board."

Public Pension Funds Continue to Recover from Recession

"The average funded level of the surveyed plans has increased from 71.5 percent in 2014 to 74.1 percent in 2015 to 76.2 percent in 2016.... [W]hen looking at returns from the past 3 years (8.6%), 5 years (8.3%), and 20 years (7.9%), the pension funds have achieved returns close to or exceeding 8 percent. When looking at the past 10 years, the investment rate of return was 6.2 percent ... [M]any are lowering their actuarial assumed rate of return to account for continued weakness in the market."

Why Public Pensions Are Cheaper Than Other Retirement Plans Like 401(k)s

"[C]losing public pension plans and moving all newly hired public employees into defined-contribution plans like a 401(k) or cash balance hybrid plans ... can increase costs.... [1] Closing a defined-benefit plan can increase unfunded liabilities.... [2] Public pensions are cheaper to administer than defined-contribution plans.... [3] Closing a defined-benefit plan can create higher public employee turnover, leading to increased training costs."

Corporate Giveaways and the Funding of Public Pensions

"Public pensions are proven economic engines, generating $1.2 trillion in economic output in 2016 and supporting 7.5 million jobs.... In Kentucky, [a] state with a long history of underfunding public pension plans, the state actually gives away more each year through tax expenditures than it collects in tax revenue. [The] annual cost of funding pensions in Kentucky is only two-thirds of the cost of those corporate giveaways."

The Great Recession and Public Pensions

"[In] 2007, most public pensions were reasonably well-funded. Several were over 100 percent funded, a good number were over 90 percent funded, and many were above 80 percent funded.... Then, in the two year period from 2008 to 2009, we see the funded ratios drop for almost all plans. Florida drops from 101.4% funded to 84.1% funded. New York drops from 101.5% funded to to 94.3% funded. Oregon drops from 112.2% funded all the way down to 80.2% funded ... The single most important thing states can do to have well-funded public pensions is to fully pay their contribution to the pensions each year."

Private and Public Pensions and the State of Retirement Security

"Pension funds were not alone in being harmed by the Great Recession, nor are they alone in struggling through the slow economic recovery since the crisis. The thing about pensions, though, is that they have time to recover.... Investment returns may be low one year -- or for several years -- but pension funds will still be there when the markets improve and returns increase. The worrying trend in the private sector is how quick companies were to abandon defined benefit pensions."

The Financial Health of Public Pensions: Facts vs. Fiction

"[P]ublic pension plans in the U.S. continue to improve their funding statuses.... The fees generated by 401(k) accounts yield billions for Wall Street firms. Pension systems pay far less because they demand lower fees in exchange for allowing firms to manage their large, billion-dollar portfolios."

GASB Standards and What They Mean for Public Pensions

"Pension debt numbers could look bigger due to two main changes in the financial reporting: [1] Instead of being 'smoothed' over time, assets will now be valued at a specific date in time. [2] The net pension liability will be calculated using a lower discount rate."

Public Pensions Work -- and These Three Systems Prove It

"This report will examine three of the most successful public pension systems in the country. These three pension plans offer a roadmap to success for other pension systems looking to provide a secure retirement for their public employees. While each is unique, their common commitment to sound funding practices and responsible management ensures that the retirees of these systems can enjoy the dignified retirement they deserve."