In honor of the NFL season officially starting tomorrow, NPPC is re-sharing this blog originally posted on February 8, 2016, and written by Tyler Bond.
Last night the Denver Broncos won Super Bowl 50. For Denver’s starting quarterback Peyton Manning, this was almost certainly his last game before retirement. Once Manning enters retirement, there is one thing he can count on: his defined benefit pension.
NFL players participate in the Bert Bell/Pete Rozelle NFL Player Retirement Plan. NFL players are fully vested in the plan after three years on active roster or injured reserve status. The benefit amount is then based on the number of credited seasons played. In 2014 the average annual NFL player’s pension benefit was $43,000.
The NFL pension plan was funded at 55.9 percent in April 2014. This is a low funding ratio, but there’s a good reason for it. Following the lock-out in 2011 and the negotiation of a new collective bargaining agreement (CBA), the NFL Players’ Association fought for an increase in pension benefits for retired players. This took the plan down to a funded status of 48 percent in 2013, but the NFL has agreed to commit $620 million over ten years to reach full funding by 2021. The latest available data indicates the plan is funded at 89 percent as of 2018.
Author(s): Tyler Bond, reposted by ARIEL MCCONNELL
Publication Date: 7 Sept 2022
Publication Site: National Public Pension Coalition
The first actuarial report is out for an Illinois pension for fiscal year 2022, which ended on June 30. It’s for the TRS, the Teachers Retirement System, which accounts for well over half of Illinois state-level pension debt.
Unfunded liabilities grew about $6 billion from $74.7 billion to $80.7 billion on a fair asset value basis. Its funded ratio worsened from 46.2% to 43.8%. The drop occurred despite a one-time, special contribution by taxpayers to the fund of $173 million that was in addition to their annual, scheduled contributions.
Expect Illinois’ other pensions to suffer similarly dismal results as their 2022 reports are published.
Milliman, Inc., a premier global consulting and actuarial firm, today released the results of its latest Milliman 100 Pension Funding Index (PFI), which analyzes the 100 largest U.S. corporate pension plans.
During October, the Milliman 100 PFI funded ratio rose from 108.8% on September 30 to 112.8% on October 31, reaching a new high for the year. The change was driven by a 35-basis-point hike in the monthly discount rate. The PFI projected benefit obligation decreased to $1.266 trillion as the discount rate rose from 5.36% in September to 5.71% for October—the highest rate since March 2010. This increase helped to offset October’s flat investment returns of 0.21%, which lowered the Milliman 100 PFI asset value by $4 billion.
State retirement systems in America are still Fragile.
Despite state and local plans reporting disappointing preliminary investment returns averaging -10.4% in 2022 , there has been a net positive funded ratio trend on net over the past three years.
Funded status in 2022 for state and local retirement systems has declined considerably from last year, the sharpest single-year decline since the Great Recession and financial crisis. Investment return volatility is contributing to some significant swings in funded levels, which has been compounded by rising inflation and geopolitical turmoil.
According to forecasting by Reason Foundation’s Pension Integrity Project, when the fiscal year 2022 pension financial reports roll in, the unfunded liabilities of the 118 state public pension plans are expected to again exceed $1 trillion in 2022. After a record-breaking year of investment returns in 2021, which helped reduce a lot of longstanding pension debt, the experience of public pension assets has swung drastically in the other direction over the last 12 months. Early indicators point to investment returns averaging around -6% for the 2022 fiscal year, which ended on June 30, 2022, for many public pension systems.
Based on a -6% return for fiscal 2022, the aggregate unfunded liability of state-run public pension plans will be $1.3 trillion, up from $783 billion in 2021, the Pension Integrity Project finds. With a -6% return in 2022, the aggregate funded ratio for these state pension plans would fall from 85% funded in 2021 to 75% funded in 2022.
Author(s): Truong Bui, Jordan Campbell, Zachary Christensen
Chicago once again earned a failing grade from Truth in Accounting in their latest Financial State of the Citiesreport thanks to over $38 billion in debt – $43,100 for each taxpayer.
Every Chicagoan would have to send the city that amount just for Chicago to pay the bills it owes. Chicago has just $9.9 billion available to pay $48.6 billion in bills. The Windy City came in 74th out of 75 cities studied in the report, only besting New York City’s massive $204 billion debt with a per-taxpayer burden of $71,400.
The city’s financial failings stem from pension promises the city cannot afford to keep. “Chicago’s financial problems stem mostly from unfunded retirement obligations that have accumulated over the years. The city had set aside only 23 cents for every dollar of promised pension benefits and no money for promised retiree health care benefits,” the report notes.
Measuring by the current-day values of the pension fund assets, unfunded liabilities – or the amount of debt the state pension funds owe that they can’t afford to pay – dropped by nearly 10 percent, to $130 billion in FY 2021 from $144 billion in the previous fiscal year. That put the state’s five pension funds at 46.5 percent funded, up from 39 percent the previous year.
That’s the name commonly used to refer to Public Act 88-0593, or the state’s 50-year plan to bring the its five pension funds to 90 percent funded by 2045.
The actual target for that ramp should be a 100 percent-funded pension system within the next 25 years or preferably sooner, according to a letter attached to the COGFA report from its actuary, Segal Consulting.
In a year filled with gloomy news of economic hardships and the ongoing pandemic, there’s a bright spot: the funded ratio of the 100 largest U.S. public pensions is up by more than 15 percent this year, according to Milliman’s annual analysis.
“Surging market returns have propelled pension assets far beyond previous levels, driving the estimated funding deficit below $1 trillion for the first time since 2012,” the report says. “We estimate that nearly half of the plans in the study stood above 90 percent funded as of June 30.”
Only 13 public pension plans were above 90 percent funded based on Milliman’s 2020 analysis.
The kinds of messages that are welcomed are “innovative” in terms of telling you that you don’t have to do the thing you really don’t want to do (put more money into the pensions, promise less, cut back on many things, tax more, etc.)
State retirement systems in America improved from last year, but are still Fragile.
This an annual report on the current status of statewide public pension systems, put into a historic context. State and local governments face a wide range of challenges in general – and some of the largest are growing and unpredictable pension costs. The scale and effects of these challenges are best understood by considering the multi-decade financial trends and funding policy decisions that have brought public sector retirement systems to this moment.
The financial market volatility over the past 18 months of the COVID-19 pandemic has ultimately been a positive investment climate for institutional investors like state pension plans. And the federal government has provided substantial financial aid to states and municipalities, smoothing over what could have been seismic budgetary shortfalls in some jurisdictions due to tax revenue declines. The combined historically unprecedented nature of these events continues to create an unpredictable environment for state pension plans. However, in this report Equable uses patterns of behavior from the past two decades as a guide to what might happen in the coming decade while also a means to identify areas of concern that should be monitored closely or acted upon immediately.