Articles | January 23, 2024

Public Pension Oversimplification Can Complicate Things

In the media, public pension plans are frequently lumped together, often at a national level. They may also be broken out by state, but even that categorization can be inaccurate. As a result, many plans get painted negatively with a broad brush.

In an article published in the Winter 2024 issue of PERSist, the newsletter of the National Conference on Public Employee Retirement Systems (NCPERS), which you can access from this page with their permission, presents data that underscores the importance of analyzing each public plan individually.

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The article covers:

  • Aggregated data on public pension plan funding by state and why it’s misleading and paints an overly simplistic picture
  • The need to consider state laws and regulations that govern how public plans operate and cause significant variance among plans
  • Key features that vary from plan to plan, like benefit levels, governance, funding, future plan health and plan costs

While some clearly (and unfortunately) see the public pension plan system collectively as being on borrowed time, most plans have paid benefits for decades (or more) and never missed a benefit payment. That’s why it’s important to read articles about “public pension plan funding” critically and draw your own conclusion based on data for individual plans. Each plan’s individual underlying structure, assumptions and other features can provide insight into the health and funding trajectory of the plan.

Have questions about evaluating the funded status of public pension plans?

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.