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The Nelson A. Rockefeller Institute of Government

 
Pension Reform

Pension Reform

Pennsylvania Public School Employees’ Retirement System Is Significantly Underfunded


A new report from Rockefeller Institute of Government examines the potential implications of investment return volatility for the Pennsylvania Public School Employees’ Retirement System (PSERS) using the Institute’s state-of-the-art Pension Simulation Model. PSERS is deeply underfunded and faces greater challenges than other pension funds examined. At the end of the 2016 fiscal year, it had a market-value funded ratio of 50 percent and an unfunded liability of approximately $50 billion. The report also examines the implications of a recent reform that created a hybrid pension plan for new employees. The project is supported by the Laura and John Arnold Foundation and The Pew Charitable Trusts.
Yimeng Yin and Donald J. Boyd, August 23, 2017

Investment Return Volatility and the Michigan State Employees’ Retirement System


A new report from the Rockefeller Institute’s Public Pension Simulation Project examines investment return volatility and its impact on the Michigan State Employees’ Retirement System (MISERS). The analysis found that a very conservative contribution policy can protect a plan closed to new members from becoming severely underfunded. However, for large closed plans like MISERS, the sponsoring governments may face a risk of substantial contribution increases if the plan invests in risky assets and if large shortfalls must be recouped in short periods of time. This is the seventh report of the Pension Simulation Project at the Rockefeller Institute, which examines the potential consequences of investment-return risk for public pension plans, governments, and stakeholders in government. The project is supported by the Laura and John Arnold Foundation and The Pew Charitable Trusts.
Yimeng Yin and Donald J. Boyd, March 30, 2017

Investment Return Volatility and the Los Angeles Fire and Police Pension Plan


A new Rockefeller Institute pension model report on the Los Angeles Fire and Police Pension Plan (LAFPP) finds that even with volatility in annual returns, the risks of severe underfunding for pension funds are greatly reduced if contribution policy is conservative and participating governments pay full actuarially determined contributions in all years. This is the sixth report of the Pension Simulation Project at the Rockefeller Institute, which examines the potential consequences of investment-return risk for public pension plans, governments, and stakeholders in government. The project is supported by the Laura and John Arnold Foundation and The Pew Charitable Trusts.
Donald J. Boyd and Yimeng Yin, February 22, 2017

Appropriateness of Risk-Taking by Public Pension Plans


In the most recent report of the Rockefeller Institute’s Pension Simulation Project, Institute researchers examine the question of how much investment risk public pension funds should take. The report sheds light on the rise in investment risk-taking by public pension funds, the regulatory incentives that encourage this risk-taking, and insights from academic research on risk-taking.
Donald J. Boyd and Yimeng Yin, February 1, 2017

How Public Pension Plan Investment Risk Affects Funding and Contribution Risk


The latest report from the Rockefeller Institute’s Pension Simulation Project examines the difficult choices public pension funds faced as interest rates fell over the last 25 years. Public plans generally increased investment risk in an effort to avoid lowering expected investment returns, creating substantial potential for plans to become severely underfunded or to require sharp increases in government contributions in the future. This is the fourth report of the Pension Simulation Project, supported by the Laura and John Arnold Foundation and The Pew Charitable Trusts.
Donald J. Boyd and Yimeng Yin, January 10, 2017

Policy Brief: How Public Pension Plan Investment Risk Affects Funding and Contribution Risk


The latest policy brief from the Rockefeller Institute’s Pension Simulation Project examines the difficult choices public pension funds faced as interest rates fell over the last 25 years. Public plans generally increased investment risk in an effort to avoid lowering expected investment returns, creating substantial potential for plans to become severely underfunded or to require sharp increases in government contributions in the future. This is the third policy brief of the Pension Simulation Project, supported by the Laura and John Arnold Foundation and The Pew Charitable Trusts.
Donald J. Boyd and Yimeng Yin, January 10, 2017

How Public Pension Plan Demographic Characteristics Affect Funding and Contribution Risk


The Rockefeller Institute has introduced a Public Pension Stochastic Simulation Model that examines the year-by-year dynamics of pension fund finances. The model forecasts the long-term outcomes of specific plans with real-world characteristics under different investment return scenarios and funding policies. This report introducing the model is the third in a series focusing on the Rockefeller Institute’s Pension Simulation Project.
Donald J. Boyd and Yimeng Yin, December 7, 2016

Policy Brief: How Public Pension Plan Demographic Characteristics Affect Funding and Contribution Risk


The Rockefeller Institute has introduced a Public Pension Stochastic Simulation Model that examines the year-by-year dynamics of pension fund finances. The model forecasts the long-term outcomes of specific plans with real-world characteristics under different investment return scenarios and funding policies. This policy brief introducing the model is the second policy brief focusing on the Rockefeller Institute’s Pension Simulation Project.
Donald J. Boyd and Yimeng Yin, December 7, 2016

State & Local Government Pension Risks


Director of Fiscal Policy Don Boyd gave the keynote address at the Standard & Poor’s Global Ratings annual forum on state and local government credit. Boyd spoke about public pension funds’ movement into riskier assets and the risks to sponsoring governments when the funds experience investment-return volatility. The presentation, co-authored by Yimeng Yin, covers other risks and consequences.
Donald J. Boyd and Yimeng Yin, December 1, 2016

Investment Return Volatility and the University of California Retirement Plan


The Rockefeller Institute has analyzed the potential consequences of investment return volatility of the University of California Retirement Plan (UCRP) as part of its new Pension Simulation Project. The model calculates the plan's annual cash flows and funded ratio under different investment return scenarios, funding policies, and plan characteristics. The simulation project was created to examine the potential consequences of investment-return risk for public pension plans, governments, and stakeholders in government.
Donald J. Boyd and Yimeng Yin, November 22, 2016

The Interplay Between Retirement Plan Funding Policies, Contribution Volatility, and Funding Risk


Funding policies common to many public pension plans can result in severe underfunding and large increases in contributions that employers are obligated to make to sustain the funds. Methods used by many plans to stabilize employer contributions can be undermined by volatile investment earnings resulting from risky assets, placing governments in the politically untenable position of facing sharp contribution increases or deeply underfunded plans. Donald Boyd and Yimeng Yin evaluate the impact of investment return volatility on these risks in a presentation made by Mr. Yin at the National Tax Association’s 2016 Annual Conference on Taxation on November 10.
Donald J. Boyd and Yimeng Yin, November 10, 2016

Comment on Proposed Actuarial Standards Board Actual Standard of Practice


Rockefeller Institute Director of Fiscal Policy Don Boyd has released comments on the Actuarial Standard Board’s (ASB) Proposed Actuarial Standard of Practice: “Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions.” The ASB establishes and improves standards of actuarial practice.
Donald J. Boyd, October 31, 2016

Standards and Metrics for Public Retirement Systems


State and local public pension fund investment risks are far greater now than in the past. This requires more analysis and disclosure of these risks to taxpayers and other stakeholders in government, as they ultimately bear most of this risk. Donald Boyd and Yimeng Yin examine these issues in a presentation for a panel that Boyd participated in on September 26 at Standards and Metrics for Public Retirement Systems, a conference in Washington, DC, organized by The Pew Charitable Trusts and the Urban Institute.
Donald J. Boyd and Yimeng Yin, September 26, 2016

Rockefeller Institute Reports Highlight Public Pension Risk


Public pension funds provide benefits to nearly 10 million people, invest over $3.6 trillion in assets, and are deeply underfunded. A new Rockefeller Institute report and policy brief put a spotlight on how the methods that public retirement systems and governments use to fund pensions are affected by investment return volatility. The analysis concludes that a typical 75-percent funded public pension plan has a one in six chance of falling below 40 percent funded within the next 30 years, a crisis level currently faced by only a few major plans. The research brief and associated report are the beginning of a series from the Rockefeller Institute of Government’s Pension Simulation Project.
Donald J. Boyd and Yimeng Yin, June 2, 2016
Policy Brief            Report

Strengthening the Security of Public Sector Defined Benefit Plans


The Rockefeller Institute, in cooperation with the State Budget Crisis Task Force, released a new report on the crisis of underfunding of public sector defined benefit plans at the National Press Club. This is the first in a series of Blinken Reports, annual analyses of key fiscal issues affecting state and local governments.
Donald J. Boyd and Peter J. Kiernan, January 2014

Rockefeller Institute and TIAA-CREF Release National Report on Pension Reform


The Nelson A. Rockefeller Institute of Government and national financial services corporation TIAA-CREF today released a joint report on pension reform, an issue that is increasingly dominating consideration of the financial strength of the public sector. Highlighted in the document were evolving workforce demographics and long-term budget pressures. The information presented in the document resulted from a major convening of state and local officials, union leaders and researchers from across the nation, held in 2012.