Officials of the National Association of State Retirement Administrators (NASRA) called the Wilshire study “alarmist” and said the document “presents a distorted and misleading view of the fiscal condition of state pension funds.” Both the latest report and a similar study issued in 2002 “employed selective use of statistics and illusory terminology to paint a bleak picture of the public pension plan universe,” NASRA complained.
“The fact that market declines have reduced the market value of plan assets should come as a surprise to no one,” NASRA President Frank Ready said in a letter to Wilshire. “What is surprising is the report’s failure to account for the fact that defined benefit pension plan funding is structured to be carried out over a long period of time. When you look beyond the sensationalism, you will find your own data actually reveal the vast majority of public pension plans are in very good financial condition, and continue to provide sound, secure retirement benefits to workers, even in the face of declining investment markets and corporate bankruptcies.” Ready is also executive director of the $14 billion Mississippi Public Employees’ Retirement System.
Ready encouraged Wilshire to reconsider the manner in which it presents its data. “While it may not grab the same headlines, the public pension community and the public would be much better served by fundamentally sound research and balanced reporting that more accurately reflects the financial condition of state defined benefit plans,” Ready wrote.
The latest Wilshire report (See Wilshire: Public Pension Landscape Still Bleak) noted that some 79% of all state plans are now underfunded – up dramatically from 31% in 2000 and 51% in 2001 – and the highest since 1990. By comparison, Wilshire estimated private pension plans had a combined 86% funding ratio as of December 31, 2002.