Tuesday, December 1, 2015

New paper: “Forensics and the Future of a Connecticut Pension Plan”

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.
This brief is available here.

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