Equable Institute Analysis Estimates U.S. Statewide Pension Funding Shortfall to Shrink by $400 Billion in 2021
PR Newswire
NEW YORK, Sept. 23, 2021
NEW YORK, Sept. 23, 2021 /PRNewswire/ -- Statewide public retirement systems are poised to deliver in 2021 the highest investment returns seen this century, according to the annual State of Pensions report from Equable Institute. The analysis finds that these record-breaking investment returns (20.7% on average), will cause unfunded liabilities to decrease to $1.08 Trillion in 2021, from $1.48 Trillion in 2020, bringing the funded ratio to 80.9% - a level last seen in 2008 amid the early days of the financial crisis and Great Recession.
State of Pensions 2021 analyzes trends in public pension funding, investments, contributions, cash flows and benefits for 159 of the largest statewide retirement systems in all 50 states (e.g., retirement plans with at least $1 billion in accrued liabilities).
While Equable finds a considerable improvement in the funding levels of public retirement systems year over year, executive Director Anthony Randazzo warns that the state of pensions in America is still fragile.
"The recent historic investment returns for state pension plans has provided significant assets to reduce funding shortfalls. But even with best-this-century returns, the collective funded status for state pension plans is still only at a fragile 81% — and that is based on a 7% average assumed rate of return, which is too high given current market forecasts. We should view these returns as a warning that state pension funds cannot invest their way back to health. State leaders and pension board trustees must ensure they are treating the problem of unfunded liabilities seriously while using realistic assumptions about the future so that they are not trying to mask with accounting tricks just how deep their funding shortfall really is."
Equable Institute's assessment of public retirement trends reveals a complex picture beneath the year's rosy returns:
For a deeper look into The State of Pensions 2021, visit http://www.equable.org/StateofPensions2021 to access additional downloads and interactive data visualizations. Additional media tools including figures, fact sheets and raw data can be found here.
About Equable Institute
Equable is a bipartisan non-profit that works with public retirement system stakeholders to solve complex pension funding challenges with data-driven solutions. We exist to support public sector workers in understanding how their retirement systems can be improved, and to help state and local governments find ways to both fix threats to municipal finance stability and ensure the retirement security of all public servants.
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SOURCE Equable Institute