The Funded Status of Local Pensions Inches Closer to States

The brief’s key findings are:

• Since 2001, the aggregate funded status of local pension plans has lagged behind that of state plans, but the gap has been closing recently for two reasons.
• First, local plans continue to receive more of their required contributions than state plans and are a bit more likely to use stringent funding methods.
• Second, in recent years, local plans have earned stronger investment returns than state plans, perhaps partly due to a lower allocation to alternative investments.
• Despite this progress, many local plans – like their state counterparts – still face significant funding challenges.