Issue brief: The Funding of State and Local Pensions: 2012 - 2016

This brief finds that the funded status of state and local pensions declined slightly in 2012 reflecting asset smoothing procedures from the 2008-2009 market crash. The issue brief also tackles the confusing road ahead as public pension plans calculate their assets and liabilities in 2014 according to new accounting standards issued by the Governmental Accounting Standards Board. Key findings include: •During 2012, using current GASB standards, the funded status of public plans declined slightly from 75 percent to 73 percent. •Going forward, the funded ratio is projected to gradually move above 80 percent, assuming a healthy stock market. •The Annual Required Contribution (ARC) increased significantly over the last three years due to higher unfunded liabilities related to the financial crisis. •In 2012, employers contributed 80 percent of the ARC owed.

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