WASHINGTON–(Business Wire)–Public pension plans are resilient, pose little burden on taxpayers, and
stimulate the U.S. economy, according to a research report from the National
Conference on Public Employee Retirement Systems.
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Hank H. Kim, Esq., executive director and counsel of the National Conference on Public Employee Retirement Systems (Photo: Business Wire)
The latest report in the NCPERS Research Series, “Public
Pensions Are a Good Deal for Taxpayers,” dissects several arguments
used by ideological organizations to discredit public pension funds on
grounds that they are inadequately funded. NCPERS has long argued that
underfunding levels are calculated using highly politicized processes in
many states and should be taken with a grain of salt.
“Critics often advance the false imperative that cities and states
should be able to cover their long-term pension liabilities with current
revenues,” said Hank
Kim, executive director and counsel of NCPERS.
“But that’s not
how advance funding models work, whether for public pensions or other
long-term goals such as retirement or college savings.”
Kahn, NCPERS research director and author of the report, offered an
example. “If you prefunded your child’s education by establishing a
college fund at birth, you’d have an unfunded liability for many years,”
Kahn explained. “Over time, investment income and ongoing contributions
would reduce this unfunded liability. With proper planning, the unfunded
liability can be reduced to zero, and sometimes a surplus is created.
That is how pensions work.”
“Many factors can affect the level of unfunded liability over a period
of years, but in the end, pre-funding is a winning formula that controls
rather than increases risk for taxpayers,” Kahn added.
The report walks through historical advantages that make public pensions
resilient, bouncing back and growing even after recessions. It also
shows how taxpayer contributions to public pensions are equal to or less
than the revenues generated by investments in pension funds and spending
by pension beneficiaries.
The National Conference on Public Employee Retirement Systems (NCPERS)
is the largest trade association for public sector pension funds,
representing more than 500 funds throughout the United States and
Canada. It is a unique non-profit network of public trustees,
administrators, public officials and investment professionals who
collectively manage more than $3 trillion in pension assets. Founded in
1941, NCPERS is the principal trade association working to promote and
protect pensions by focusing on advocacy,
for the benefit of public sector pension stakeholders.
CommCore Consulting for NCPERS
Debra Cope, 202-468-3814