On a market value basis, public pension funded status
increased by more than 4% in 2014. Imminent funding challenges: Flat equity
performance in 2015 and lower return expectations going forward
Highlights:
- Strong market performance through 2014 has led to an increase in overall reported funded ratios, from 70.7% to 75.0% on a market value of assets basis.
- After several years of strong returns the flat market to date during 2015 will erode funded ratios, although the impact will not be fully recognized for several years in most plan sponsors’ funding policies.
- A significant headwind for funded status is generated by the continued decline in market consensus views on longterm return expectations—lower return assumptions mean higher liabilities.
- For the first time, retired and inactive members outnumber active members.
Download the 2015 public Pension Funding Study here…
Source: Milliman
US
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