Census Data Depletion Date Anomalies

The four worst funded public pension systems, according to recently released US Census data, 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 valuations (and not GASB numbers). Yet when doing a cash flow analysis two of the states (New Jersey-1 and Kentucky-2) do run out of money fairly soon (in 2030 and 2031 respectively) as you would expect but the two others (Illinois-35 and Connecticut-42) are back in the pack (in 2058 and 2076 respectively). What gives?

Here is the census data in total and for those four states:

Now turning to data from www.publicfundsurvey.org on 2015 contributions for those states by plan we generate this spreadsheet (numbers in thousands):

Connecticut and Illinois are putting in a substantial portion (99.73% and $91.79% respectively) of their Actuarially Required Contribution (ARC) which, when added to the employees’ contributions, do keep the plans going a bit longer. The trick is to keep funding at those levels which becomes ever more burdensome as the actuarial assumptions upon which those mini-contributions are based prove out to be ever rosier.

New Jersey (and to a lesser extent Kentucky with their Teachers Plan) has no such qualms about respecting their ARC which is why it is most likely to be the first state to test Puerto Rico waters.

 

4 responses to this post.

  1. Posted by Anonymous on May 30, 2017 at 6:30 pm

    Oh come on now it’s got nothing to do with the lack of funding the ARC just ask Federal pension receipts.

    Reply

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