Milliman Study

Milliman released a funding study for what they say* are the 100 largest public pension plans in the country as drawn from official actuarial valuation reports (with liabilities ‘recalibrated’ to use 7.25% as an interest rate instead of 7.65%) and among the notable excerpts:

For the first time, retired and inactive members outnumber active members.

The plans reported aggregate accrued liabilities of $4.08 trillion for the more than 25 million members covered by the plans in the study. Individually, the plans range in size of accrued liability from $9 billion to $375 billion. The 10 largest plans account for nearly 40% of the total accrued liability and the top half of the plans represent more than 80% of the total.

The reported aggregate accrued liability consists of $1.67 trillion for the 12.5 million plan members who are still working, plus $2.41 trillion for the 12.6 million plan members who are retired and receiving benefits or who have stopped working but have not yet started collecting their pensions.

On average, active members have a sponsor-reported accrued liability of $134,000 per person and retired and inactive members have a sponsor-reported accrued liability of $191,000 per person. In aggregate, the plans currently have assets sufficient to cover 100% of the sponsor-reported accrued liability for retirees and inactive members but only 39% of the assets needed to cover the sponsor reported accrued liability for active plan members.

Per their Figure 7 – 70% of the assets are in risky investments (47% in Equities and 23% in Private equity, real estate, etc.)

Even with the recalibration the overall numbers are not to be taken seriously but they are of some comparative value since everyone is lying pretty much equally in their valuation reports.  Milliman in their study includes an alphabetical listing of those valuation numbers they pulled off but it would have been helpful to get totals in a manipulatable format so, for your sorting pleasure, here it is.

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* Hard to tell what Milliman’s criteria was for inclusion but Puerto Rico can’t possibly have two of the 100 largest public plans in the country but they are here possibly for the dark humor of a 3% funded ratio.

 

10 responses to this post.

  1. Posted by Anonymous on December 4, 2015 at 1:06 pm

    Say it ain’t so, time for plan what!

    Reply

  2. Posted by Anonymous on December 4, 2015 at 10:03 pm

    Come on what is wrong with everybody, full after the pig roast?

    Reply

  3. Posted by Tough Love on December 5, 2015 at 12:12 am

    Quoting …. ” In aggregate, the plans currently have assets sufficient to cover 100% of the sponsor-reported accrued liability for retirees and inactive members but only 39% of the assets needed to cover the sponsor reported accrued liability for active plan members.”

    Note the NEED for new CONTRIBUTING participants to keep the Plans afloat. …… the epitome of a PONZI Scheme.

    Boy is this going to end badly.

    Reply

  4. Posted by MJ on December 5, 2015 at 3:48 pm

    Sounds like the first sentence pretty much sums it up “retired and inactive members outnumber the active members” What exactly is an “inactive” member? Can anyone clarify?

    Reply

    • Inactive is typically a very small portion of a public plan population and really should have a separate category as they do in the private sector.

      They are participants who have accrued a vested benefit, terminated employment, but have not yet begun receiving monthly benefits. They may also include those who have not vested but still have their own contributions in the plan. Valuation reports split them out (calling them vested terminated participants). NJ JRS plan for example on page 7 of 36 here:
      http://www.state.nj.us/treasury/pensions/pdf/financial/2014jrs.pdf

      as of July 1, 2014 reports 397 active benefit accruing participants, 561 retirees, but only 4 vested terminated.

      Reply

    • Posted by S Moderation Douglas on December 6, 2015 at 12:20 am

      This is secondhand information on inactive members in California. It looks about right, because according to BLS, median tenure for state workers is 7.4 years.

      “Of the 1.1 million active and inactive members of CalPERS, approximately 800,000 are active and about 300,000 are not yet retired but no longer work for a government agency whose retirement program is managed by CalPERS. In short, by 2020, there will be about as many — or even more — retirees than active members of CalPERS.”

      (Calwatchdog.com JULY 22, 2100)

      Reply

  5. Posted by Anonymous on December 5, 2015 at 9:00 pm

  6. Posted by Rex the Wonder Dog! on December 7, 2015 at 1:16 am

    Puerto Rico can’t possibly have two of the 100 largest public plans in the country but they are here possibly for the dark humor of a 3% funded ratio.
    Not humorous at all, but a sad.

    The pathetic state our public employees have driven us to…sad.

    Reply

    • Posted by Tough Love on December 7, 2015 at 1:34 am

      More of the “blame” lies with our self-interested Elected Officials who granted these grossly excessive, unnecessary, unjust, unfair (to taxpayers), and clearly unaffordable pensions & benefits …….. so as to keep the bribes to do so (in the form of Public Sector campaign contributions and election support) coming in.

      Reply

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