- 2011 data show that locally-administered pension plans continue to be slightly less funded than state-run plans – 72 percent vs. 76 percent.
- This result is puzzling because local plan sponsors generally pay a larger share of their annual required contribution than state plan sponsors.
- The explanation is that state plans have historically earned higher returns because they invest more in risky assets.
- For mature plans with substantial assets, higher returns more than offset lower contributions.
- During the financial crisis, though, local plans were able to narrow the funding gap because their less risky portfolios fared better.
Locally-Administered Pension Plan Funding Lags That Of State Plans
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