US - Minnesota's largest public pension plans are saddled with a deficit of nearly US$10bn and are blighted by contribution deficiencies, a Minnesota Taxpayers Association report has found.
In a study of the state’s three major independent teacher plans - St. Paul, Duluth, and Minneapolis Teachers Retirement Fund Associations - and three major state-wide public employee plans - Minnesota State Retirement System (MSRS), Public Employees Retirement Association (PERA) and the Teachers Retirement Association (TRA) - the report identified unfunded pension liabilities totalling $6.1bn.
But that figure rose to $9.8bn after liabilities for the Minnesota Post Retirement Investment Fund, focused exclusively on assets and liabilities of existing retirees, were factored in.
The report also found five of the six plans had contribution deficiencies, with the MSRS’ and PERA’s the largest they had been in 30 years.
While contribution increases were already in place to tackle those shortfalls, the report stated that all approved increases to fix the PERA funding gap alone would result in a $380m increase in local government spending through 2010, in the form of city and county governments’ pension contributions.
Real life divergence from the assumptions actuaries used to calculate future pension liabilities also had a major influence on reported pension fund health, the report found.
“Changing mortality rates, rates and timing of employee retirement, and related demographic issues added nearly $4.5bn in unfunded liabilities to the six fundssince 2002.”
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