Pension Transition Cost Myths

PensionDialog welcomes the following article from Gary Findlay

In a recent post on The American titled “Public-Sector Pensions: The Transition Costs Myth,” Andrew Biggs noted that public pension administrators and other subject matter experts have “an obligation to provide the public with solid facts.” I could not agree more.

The Mystique of the 80% Funding Threshold

Experts say, “A public pension fund is deemed healthy if it is 80 percent funded.”

Connecticut Governor Dannell Malloy has made it his goal: “What I actually aspire to is getting to an 80 percent funding as rapidly as we can and the fact that we can do that and save the taxpayers $6 billion is pretty important.”

But the questions are who are the “experts” and why 80 percent?

Status of States Making Pension Payments

A public pension plan’s annual required contribution, or ARC, reflects the amount a state (or locality) needs to set aside to fund benefits accrued in the current period (the normal cost) plus the amount needed to retire the plan’s unfunded liability over the plan’s funding period.

Will Public Pensions Run Out of Money?

A recent issue brief published by the Center for Retirement Research (CRR) at Boston College, “How Would GASB Proposals Affect Public Pension Funding Levels?,” has created some stir – and is being cited – for its inclusion of the “run-out dates” for 126 public pension plans.