Group Says Report on State Retiree Benefit Funding Is “Flawed”

April 26, 2011 ( - The National Conference on Public Employee Retirement Systems (NCPERS) says a new analysis from the Pew Center on the States “is seriously flawed and, as a result, comes to misguided conclusions that dramatically overstate the financial challenges facing state pension plans.”

In a statement, Hank Kim, Esq., Executive Director & Counsel of the NCPERS, contends the Pew Center relied on out-of-date data and employed faulty assumptions (see Report Indicates $1.26T Funding Gap for State Retiree Obligations). “Were government policymakers to embrace Pew’s thinking, they would undoubtedly formulate equally misguided approaches to dealing with their public pension systems – approaches that might well do irreparable long-term harm to those pension funds and to the millions of public employees who are relying on those funds for their retirement security,” he said.   

According to Kim, NCPERS and other public pension experts offered to review and provide input for this Pew report, largely because of the controversial Pew study from last year (see IMHO: Promises Premises), but the Pew Center declined the offers.  

“The new Pew report relies on 2009 data – data from a low point in the recent historic market downturn. That data is outdated. Much has changed in the last 18 months – virtually all of it for the better. In addition, the new Pew report continues to link health care costs with public pension costs. Health care and pensions are two entirely different animals. What’s more, the Pew report does not take into account the national health care reform enacted in 2010,” Kim argued.   

He said that new research by NCPERS paints a much different, much more accurate and far more positive picture, showing that the vast majority of public pension systems are healthy, are more than adequately funded and are earning above-average returns on their investments (see Survey Finds Public Pensions Generally Healthy).  

Finally, Kim says: “Another important truth is that public pension plans are already changing to adapt responsibly to current economic realities and to further ensure their long-term sustainability. In 2010, more changes were enacted by state and local governments across the country than in any year in recent history. More modifications are already in the works – to benefits, plan design, operational practices, oversight practices and more. This continuing restructuring should guarantee not only that public pensions remain the most economically efficient means of delivering retirement benefits, but also the least costly, at least to states and localities that have kept up with their required contributions to those plans. Jurisdictions that have shown less funding discipline may face greater challenges.”