All public pension valuations severely understate liability values and contribution ‘requirements’ to cater to the government/client’s whims so when reviewing the actuarial reports for the Connecticut State Employees Retirement System (SERS) you have to ignore most of the numbers and concentrate on deposits and payouts to tell you the real story:
Back in 2000 the SERS reported having $8 billion in assets and there has always been a substantial net outflow (averaging about $300 million) annually. You would expect assets to be close to depletion by now but as of 6/30/14 the SERS claims to have over $10.5 billion in assets due to exceptional investment earnings.
Without changes to the nature of the plan you can expect benefit payouts and participant deposits to be steady over the years so, projecting forward, the SERS could still avoid bankruptcy assuming:
- continued miraculous investment growth, and
- Connecticut coming up with over 3.5 times more in deposits annually in 2027 than they are putting in now.
Neither appear likely.