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Contributions to State and Local Government Plans Up

State and local governments’ contributions to their pension plans have more than recovered from the effects of the Great Recession. According to a new report by the National Association of State Retirement Administrators (NASRA), their contributions are now at the highest level they have been since the economy’s recent nadir.

In “NASRA Issue Brief: State and Local Government Contributions to Statewide Pension Plans: FY 14,” which NASRA issued in July 2016, NASRA discusses how contributions are determined, trends in employer contributions and where they stand today.

The report notes that while state and local governments’ contributions to pension trust funds amounts to approximately 4% of all their expenditures, they vary widely from jurisdiction to jurisdiction. In addition, it notes, not all public employers are required to contribute a set amount to retirement plans as are employees.


Nonetheless, says NASRA, fiscal year (FY) 2014 “reflects an improved effort among state and local governments to make the full actuarially determined pension contribution, as well as a decline in the rate of growth of pension costs.”

How much improved? “FY 14 marks the highest contribution experience since the market decline of 2008-09 increased unfunded pension liabilities and the economic recession diminished state and local fiscal conditions,” says NASRA.

The report says that overall, there was 4.3% increase in the required contribution from FY 13 to FY 14, and that the median actuarially determined contribution (ADC) received in FY 14 was 100%. On a dollar-weighted basis, the non-weighted average ADC received was 93%; the average ADC was approximately 87%, a difference that NASRA attributes to a few larger plans having received a low portion of their ADC, reducing the weighted average.

NASRA argues that the effort FY 14 demonstrates by state and local government employers to make full ADCs “will forestall higher costs in the future and strengthen the long-term sustainability of public pension plans.”