The Equable Institute recently released a report implying the “vast majority” of public pensions as having “a fragile or distressed funded status,” with the funded ratio for statewide plans “near its lowest point in modern history.” Equable is an organization that has ties to other organizations who are opponents of public pensions.
In a recent blog post, the National Public Pension Coalition (NPPC) dispelled three pieces of misinformation from the report. First, the NPPC refuted the Institute’s claim that funded ratios have taken a major financial hit citing recent gains in the S&P 500 nearly erasing all losses following the original market downturn in March. The NPPC also noted that the Institute lowballed estimates for funded ratios in the report compared to other reputable organizations.
Finally, the NPPC points out an important factor the Institute overlooked in their report: the Gross Domestic Product (GDP) ratio and pension debt. A report from the National Conference on Public Employee Retirement Systems (NCPERS) indicates that when GDP rises alongside pension debt over the long term (which has been true for the past several decades, even taking into account recessions), pension plans will be well-equipped to manage their levels of debt. As long as this is a stable ratio, pensions should be able to continue paying out benefits during the recession and beyond.
Check out the infographic LRTA created that compares and contrasts the information from the Institute’s report and the NPPC brief. Now is the time to become familiar with the facts and prepare for conversations with opponents of public pensions. We hope this graphic will help!