Using the most stringent framework, where assets and benefits earned to date are put in an “old” plan and normal cost payments cover all future accruals, CRR found most plans have enough assets to last for at least 15 years. Using a more realistic “ongoing” framework, where normal costs are used to cover benefit payments, it found most plans have enough for at least 30 years.
CRR said exceptions include Connecticut SERS, Illinois SERS, Illinois Universities, Kentucky ERS, Louisiana Teachers, New York City Teachers, and Rhode Island ERS.
In its Issue Brief, the CRR noted that most state and local plans improved their funding discipline and management in recent decades, so they had a relatively solid foundation in place before the financial crisis hit. In addition, states have already begun responding to their shortfalls by increasing employee contributions and reducing benefits for new employees.
However, the report concluded the outlook of public pensions is closely tied to the recovery of the economy and the stock market.The CRR Issue Brief is here.