Funding Levels and Gender in Public Pension Plans

Abstract

Using a comprehensive sample of 2002 and 2005 U.S. public retirement systems, we found that public pension plan underfunding grew dramatically in these years despite a good economy, increasing state tax revenues, and strong stock market returns on average, plans were only 83% funded. Teacher plans and plans with the most retirees were more underfunded. We found no significant differences related to asset allocations or actuarial assumptions about inflation and rate of return. A primary factor associated with significantly lower underfunding was more female active participants in the plan, suggesting another risk to women's retirement income.