The Funding of State and Local Pensions in 2010

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The brief’s key findings are:

  • During 2010, the funded status of public plans fell from 79 percent to 77
  • This decline was primarily due to slow growth in assets, which reflects
    smoothing of market gains and losses over a 5-year period
  • The comparable figures discounting liabilities by the riskless rate are 53 percent to 51 percent.
  • Going forward, the outlook for pension funding is mixed.
    • States and localities have been falling short on required pension payments.
    • But they have been trimming payrolls, reducing benefits for new hires, and raising contributions.
    • And the impact of the financial crisis on asset values will gradually fade.

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