And the Healthiest Pension Fund is…
Pennsylvania has three pension systems, though only two of them can really be considered as unified systems which cover all employees by type. There is the state employees’ system (SERS), the school employees’ system (PSERS), and then there is the local employees’ system-a collection of over 3,000 plans housed at the local level for police, fire, blue- and white-collar workers at counties, municipalities, authorities, and associations. Some are administered through the PA Municipal Retirement System by local governments that voluntary place them there. When considered in aggregate, the local system has 136k employees, placing it in between PSERS (282k) and SERS (100k).
Recent actuarial data shows how healthy these three systems are in terms of funded ratio-that’s the actuarial value of the assets divided by the actuarial value of the liabilities to produce a percentage. A funded ratio of 100% means the plan has sufficient assets set aside to pay for the promised liabilities. A funded ratio between 80-100% would be considered healthy, a funded ratio of 50% or below like that of the cities of Pittsburgh and Philadelphia mean drastic measures are needed, as evidenced here by the events of 2010 and the debates over a parking lease as a way to avoid a state takeover of Pittsburgh’s pensions.
The funded ratios for the plans are as follows: SERS, 84% funded; PSERS, 75% funded, and aggregate local, 72% funded. Again, there is significant influence on the funded ratio of the local system because of the poor condition of the state’s two biggest cities. Removing the six plans hosted in each city (1 each for police, fire, and non-uniformed employees) radically changes the actuarial picture of the remaining local plans and increases the aggregate funding ratio from 72% to 90%.