Pew Ranks

Last month the Pew Charitable Trusts released their annual funding gap study based on data from the CAFRs of over 230 public pension plans.  There are data glitches that make the results suspect:

But if all the plans have similar data issues then there is something to be gained from looking over and sorting some of Pew’s raw data (in 1,000s).

By worst funded plan:

By change in funded ratio since 2003:

 

New Jersey tops both these lists but when you look at the six states with liabilities in the $200 billion range:

New York has supposedly kept up with funding while Texas, Ohio, and Florida have their plans in the 80% range but have New Jersey and Illinois used the savings from shirking their pension funding responsibilities to create an economic dynamo in their respective states that will allow an easy payoff of these massive obligations? New Jersey certainly hasn’t.

 

 

12 responses to this post.

  1. Posted by dentss dunnigan on May 3, 2017 at 9:36 am

    The big tell here is every state lost ground from 2003 to 2015 .So the last 12 years have been a bust for every states spensions while the S&P futures have gained 890% I know quite a few mutual funds that have gained more I know because I own a few .But I really dislike comparison of the two .however I believe the problem here are payouts increasing ,state missing payments plus to low contributions into the fund ,poor investments With interest rates at zero for the last 8 years have contribute greatly to the loss of value in any fund seeking safety low risk . . When a retirement account is losing assess the only way to save it is by reducing money flowing out ,take a set percent (4%,5 %)and stick to that.Obviously were beyond that with 12% of the fund going out and growing every year .

    Reply

    • Actually some states (in the spreadsheet that was cut off in the jpg file in the blog) did do better – West Virginia in particular:

      Nebraska 91.3% 92.1% -0.72%
      Missouri 81.4% 81.9% -0.48%
      South Dakota 104.1% 97.3% 6.79%
      Maine 82.5% 74.4% 8.15%
      Idaho 91.8% 82.9% 8.86%
      Oklahoma 79.2% 66.4% 12.75%
      West Virginia 76.9% 40.2% 36.77%

      Also may have been a natural adjustment with the drop in interest rates where you would expect some drop in funded ratio – though that is a very small part of the explanation of the NJ drop.

      Reply

  2. Posted by Anonymous on May 3, 2017 at 12:11 pm

    Re your “funding flaw for underfunded Plans” ……….

    That’s where the GASB “caved” in (to Public Sector special interests) MISERABLY, by not requiring that the computation of the GASB-Reported funding ratio discount “unfunded” liabilities FROM THE VALUATION DATE* using the discount rate required by Private Sector Plans in their valuations.

    * and NOT starting in the year when assets run out.
    **********************************

    That said, it certainly would be much BETTER if Public Sector Plans had to discount ALL liabilities (including those backed by real assets) at the rates required by Private Sector Plans.

    Reply

  3. Posted by George on May 3, 2017 at 1:08 pm

    But the good news is if the markets totally collapses, just like The Simpon’s prophecize after the Trump administration, Jersey gets cut in half from say 30% to 15%, while NY drops from 100% to 50%. You see NJ is not underfunded, NJ is just short the market at the top. Tesla and the FANGs going down.

    There is even an infinitesimal chance the hedge funds NJ invests in are actually hedging, unlikely but possible.

    Reply

  4. Posted by skip3house on May 3, 2017 at 4:20 pm

    When the fan gets hit soon/sooner/later, what is best guess what will happen then, and should we do what now? How do you cure ignorance? As NJ taxpayer or NJ retiree hopeful/present, can we adjust to fact pensions will be lots less than politically promised and values plain lied about?

    Reply

    • Whatever happens in Puerto Rico will likely be the template since they are basically pay-go now.

      Reply

    • Posted by George on May 4, 2017 at 5:41 am

      According to the 2013 annual report for Detroit’s general retirement system, the city’s pension plan “is stable and secure and expects to meet all future retirement obligations to its members.”

      Wait. Isn’t Detroit bankrupt?! Well, I fudged here just a bit. The annual report quoted preceded the city’s bankruptcy by some months. In fact, though promised pension payments were cut, the retirees didn’t do too badly. The bankruptcy judge blessed a settlement (at the expense of other creditors) that preserves the lion’s share of their benefits. At least for now.

      But the mess in Detroit, alas, is only the beginning of a great unraveling of retirement plans for state and local employees in much of the United States. And even relatively happy endings can hardly be taken for granted.

      The first question that occurs is who is going to be stuck with the bill. Taxpayers?

      http://www.milkenreview.org/articles/public-pension-plans?IssueID=23

      Reply

    • Posted by skip3house on May 3, 2017 at 7:44 pm

      Thank you, both. Several years ago, the late Dunstan McNichol (Star Ledger) figured the danger of this happening. No attention paid, though someone commented he should be our NJ Treasurer..

      Reply

  5. Posted by Now Retired Pat on May 3, 2017 at 10:28 pm

    I’m 55 now. Just need to hang on about another 35 years, and all is good!

    Reply

  6. […] are in the states of Connecticut, Illinois, Kentucky, and New Jersey (which is in line with the Pew rankings).  All have funded ratios below 50% even using liability calculations from their own actuarial […]

    Reply

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