What’s In This Monitor?
A snapshot of pension underfunding at the national, state and plan level. We show aggregate data on pension underfunding, funding ratios, number of states and plans underperforming etc. We also provide detailed state-by-state and plan-by-plan real-time data.
Why This Is Important?
As discussed in our prior post, the US has gone from fully funded back in 2001 to now under 70% funded, with the average American on the hook for about $5,000. The funding status of pensions is very vulnerable to market moves given aggressive target returns, and this tool enables people to monitor the status real-time.
Description Of Key Items
Underfunding: Gap between liabilities and assets, which is effectively debt.
Burden on Average Resident: The underfunding on a per capita basis. The underfunding will have to be made up in some way and constitutes a burden on taxpayers.
Funded %: This is the ratio of assets to liabilities. Basically it shows for every $100 owed to plan beneficiaries how money there is actually.
Target return: This is set by the plan as an investment return they need to achieve to fund their plans. On average, these are 7-8%.
Returns: Actual returns on the plans assets (which are invested in stocks, bonds, etc.).
Returns versus target: We show the actual returns versus the target. For example, if a plan has an 8% return target, but it has only returned 5%, it is underperforming its target by 3%.