Data and Research August 24, 2017

Public Pension Plan Funded Status Slowly Improves

As of the end of the second quarter of 2017, four more of the 100 biggest public pension plans crossed the 90% funded status mark.
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Strong investment returns during the second quarter improved the funded status of the country’s 100 largest public defined benefit (DB) plans by $33 billion, according to research by global consulting and actuarial firm Milliman. 

According to the second quarter results of its Public Pension Funding Index (PPFI), this drove the funded ratio of these plans from 72.0% at the end of March to 73.0% as of June 30, 2017. Investment returns were 3.06% in aggregate.

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The second quarter also saw four more Milliman 100 plans cross the 90% funded mark. As of the end of the second quarter, 19 plans have funded ratios above 90%; 60 have funded ratios between 60% and 90%; and 21 have funded ratios lower than 60%.

The Milliman 100 PPFI total pension liability increased from $4.698 trillion at the end of the first quarter to an estimated $4.737 trillion at the end the second quarter. 

“During the first half of 2017, the number of PPFI plans funded at 90% or above has almost doubled,” observes Becky Sielman, author of the Milliman 100 Public Pension Funding Index. “But while strong market returns have helped plans across the board this spring, the lowest funded plans simply do not have enough dollars in the market for these favorable conditions to boost their funded ratios appreciably. In the absence of more contributions from plan sponsors, these poorly funded plans might find themselves in a position where benefit reforms are necessary in order to maintain their ability to pay benefits.”

To view the Milliman 100 Public Pension Funding Index, go to Milliman.com. 

Data and Research August 24, 2017

Thirty-Eight Percent of Workers Do Not Participate in Their Retirement Plan

Over the past year, 18% reduced their savings.
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Eighteen percent of workers reduced their 401(k) contributions and/or personal savings in the past year, CareerBuilder found in a survey. Thirty-eight percent do not participate in a 401(k) plan, individual retirement account (IRA) or any other type of retirement plan. Twenty-six percent did not set aside any savings during the last year.

Twenty-five percent of workers said they were not able to make ends meet each month in the past year, and 20% have missed some payments. Seventy-one percent of workers say they are in debt, and among this group, 56% worry they will never be able to climb out of that debt.

Seventy-eight percent of workers are living paycheck-to-paycheck, up from 75% last year. Even for those making $100,000 or more a year, 9% say they are living paycheck-to-paycheck. For those earning between $50,000 and $99,999, this is the case for 28%.

“As an employer, your employees’ financial problems become your financial problems,” says Rosemary Haefner, chief human resources officer for CareerBuilder. “If workers are constantly thinking about their financial struggles, their quality of work can decrease.” If employers offer a 401(k) match or host financial planning seminars, they can allay some of these financial concerns, she says.

Only 32% of workers stick to a budget, and 56% save $100 or less a month. A mere 4% save between $751 to $1,000 a month, and a scant 10% save more than $1,000 a month.

Harris Poll conducted the survey of 3,462 employees for CareerBuilder between May 24 and June 16.

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