Some concerning new figures have just been released by the Pension Review Board (PRB) that shine a poor light on Texas’ state and local retirement systems.
According to the PRB’s latest report—Pension Review Board Meeting Packet (pgs. 86 – 88)—Texas’ state and local pension plans have accumulated more than $57.4 billion in unfunded liabilities as of June 2015. Unfunded liabilities refer to the difference between what’s been promised to future retirees and what’s actually on hand to cover benefits. That’s an increase of almost $500 million in unfunded liabilities since December 2014.
Huge unfunded liabilities aren’t the only trouble spot shown in the report either. The plans’ funded ratio, which measures a plan’s assets relative to its liabilities, may also suggest that troubled waters lie ahead. Generally speaking, a funded ratio of 80 percent or more “signifies a fiscally sound plan.” The statewide average for all plans is hovering just above the lower bound of this threshold at 80.5 percent. Meanwhile, just 3 pension plans are fully funded at 100 percent or more.
Lastly, the report shows that of the 93 state-local plans monitored by the agency, almost two-thirds have amortization periods that exceed 25 years, which is outside the PRB’s “recommended amortization period.”
Source: Texas Pension Review Board