How Did State/Local Plans Become Underfunded?Categories: National Developments,New England Developments
Center for Retirement Research at Boston College by Alicia H. Munnell, Jean-Pierre Aubry, and Mark Cafarelli, January 2015
The brief’s key findings are:
- A new analytical tool tells a clear story of why unfunded liabilities rose during 2001-2013.
- The primary factor was investment returns that fell short of expectations due to the two financial crises.
- A secondary factor was that many plans failed to make adequate contributions, a more serious problem among the worst-funded plans.
- This type of analysis should be added to every plan’s annual actuarial valuation.