The Center for Retirement Research at Boston College has released a new Issue in Brief:
“Forensics and the Future of a Connecticut Pension Plan”
By Jean-Pierre Aubry and Alicia H. Munnell
The brief’s key findings are:
- Connecticut’s State Employees Retirement System faces a large unfunded liability, despite recent efforts by the State to fund.
- A significant source of the liability is the “legacy debt” built up before the State began pre-funding its pensions in the 1970s.
- More recently, inadequate contributions, low investment returns (since 2000), and early retirement incentives have added to the problem.
- A promising approach for addressing the funding problem is to provide more breathing room in exchange for a real and sustained commitment to funding by:
- separately funding the legacy debt over multiple generations; while
- funding ongoing benefits using a stricter method for calculating required contributions, and reducing the long-term assumed return on plan assets.