Study Finds 61 Cities’ Retirement Systems Face $217B Gap
For pensions, these cities had a shortfall of
Between 2007 and 2009, 16 cities consistently did well in funding their pensions, while nine cities underperformed. Wide disparities exist in how well prepared cities are to fulfill their pension obligations to employees.
While investment losses during the Great Recession depleted cities' pension funds nearly across the board, the new Pew report found another factor made the difference between the best- and worst-funded pension systems.
"Having studied 61 cities and the 50 states, the better-funded plans all share one characteristic; they have the discipline to pay their annual pension bills," Draine said.
Nearly six out of 10 cities made at least 90 percent of their annual payments in all three years studied. Among those jurisdictions, pension funds weathered the recession better and their funding levels dropped only half as much as cities with poor funding habits.
How cities interact with their state can also have an influence on their pension system. For example, in
"When city leaders lack the authority to fix their underfunded pension systems, it can further strain budgets," said Draine. "Both city and state policymakers will need to work together to put these poorly funded plans back on a firm footing."
For pensions, the 16 best performing cities included in the Pew study are:
The nine worst performing cities included in the Pew study are:
Besides pensions, many localities also have promised health care, life insurance, and other non-pension benefits to their current and future retirees, but few have started saving to cover these long-term costs. As of 2009, only
Find the full report at:http://www.pewstates.org/research/reports/a-widening-gap-in-cities-85899442341
About the Methodology:
Researchers examined the retirement plans listed in each city's Comprehensive Annual Financial Report (CAFR). Principally from these documents, Pew collected the actuarial value of assets and liabilities for each defined benefit pension plan and other post-employment benefit plan that a city participated in for fiscal years 2007, 2008, and 2009. Because some cities are slow to report their results, a complete set of data was available only through fiscal year 2009. The report also includes 2010 data for 40 cities.
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