Can State and Local Pensions Muddle Through?

Alicia H. MunnellJean-Pierre AubryJosh Hurwitz Laura Quinby

SLP#15

The brief’s key findings are:

  • The market crash has hurt public pensions, and quick fixes aren’t feasible because:
    • pension cuts for new hires take time to add up; and
    • tax revenues have been hit hard by the recession.
  • Fortunately, most plans do not face a liquidity crisis.
  • Years to exhaustion depend on investment returns and concept. With 8 percent returns, most plans have:
    • at least 15 years under “termination” concept.
    • at least 30 years under “ongoing” concept.
  • Notable exceptions include Connecticut SERS, Illinois SERS, Illinois Universities, Kentucky ERS, Louisiana Teachers, New York City Teachers, and Rhode Island ERS.