Locally administered pension plans are as well funded as state plans and have better track records for making their Annual Required Contributions (ARCs), according to the Washington-based Center for State and Local Government Excellence's (CSLGE) eighth issue brief on retirement plans, released in October. However, "The Funding Status of Locally Administered Pension Plans" also found that some jurisdictions are facing serious shortfalls in their plans, and the declining economy may lead to even more difficulties in the future.
The study of 84 local pension plans, based on 2006 data, found that their average funding ratio was 85 percent, versus 84 percent for states. Also, 69 percent of the plans made their ARCs, compared to 54 percent of state plans, according to the report. "While the 2006 data show that most plans are well funded, there is reason to be cautious," CSLGE Executive Director Elizabeth Kellar said in the report's introduction. "Current economic conditions will make it difficult for local governments to maintain funding discipline, and a few plans are poorly funded."
View the entire report as a PDF.