funding ratios | Pension360

Dutch Pension Funding Ratios Drop By 5 Percent in January

The funding ratios of Dutch pension funds have fallen on average by 5 percentage points in January on the back of low interest rates, according to Mercer and Aon Hewitt.

Average funding, according to estimates by Aon Hewitt and Mercer, fell by 5 percentage points over the period, due to persistently low interest rates, the criterion for discounting liabilities.

[…]

The consultancies also attributed the sudden drop in funding to a new accounting method for calculating coverage ratios.

Since 1 January, when the Netherlands introduced its new financial assessment framework (FTK), schemes’ funding has been based on actual interest rates while applying the ultimate forward rate (UFR), rather than the three-month average of interest rates plus UFR.

In addition, the new FTK came with a ‘policy funding ratio’ – meant as a criterion for rights cuts and indexation – consisting of the average coverage of the previous 12 months.

According to Aon Hewitt, policy funding stood at 109% at January-end, while Mercer placed the figure at 109.6%.

[…]

[Aon Hewitt chief commercial officer for retirement and financial management Frank] Driessen said the ECB’s recently announced quantitative-easing programme had led to a further slide of interest rates and predicted that rates would remain low for “a long time”.

The average funding ratio of Dutch pensions stood at 103 percent at the end of January, according to Aon Hewitt.

New California Pension Data Now Online

California’s financial transparency website now features pension data on its state, county, and city-level pension systems.

The site includes data on assets, liabilities, funding ratios, membership statistics and actuarially required contributions, among other things.

More from MML News:

State Controller John Chiang has just made over a decade’s worth of state pension fund information available for public view on his open data website, ByTheNumbers.sco.ca.gov.

The site already allows taxpayers to track balance sheets of the state’s 58 counties and 450-plus cities in terms of their revenues, expenditures, liabilities, assets, and fund balances.

According to Chiang, this latest, massive data dump, representing over a million new data fields, provides “a one-stop portal into the financial underpinnings” of each of California’s 130 public pension systems. The information comes as the state and local communities continue to wrestle with managing pension costs, including how to manage the unfunded liabilities associated with providing retirement security to police, firefighters, teachers and other providers of critical public services.

The Sacramento Bee has already crunched some of the numbers:

Local-government employers contributions to defined-benefit retirement systems have nearly tripled in the last 11 years, according to the most recent data published by the California State Controller’s Office, while employee contributions have nearly doubled.

Meanwhile, more retirees are drawing money from their retirement systems while fewer active employees are paying in. Some of the troubling numbers:

– Cities and counties statewide paid $17.52 billion last year into pension funds, up from $6.38 billion in 2003. Employees’ contributions rose from $5.21 billion to $9.07 billion in 2013.

– Despite receiving more money, pension systems’ unfunded liabilities soared from $6.33 billion to $198.16 billion over the 11-year span.

– The number of local government retirees drawing benefits increased 50 percent, from a little over 800,000 in 2003 to 1.22 million last year.

– In 2013, there were 2.14 million active employees who paid into their retirement systems, down slightly from 2.25 million workers on local government payrolls in 2003.

You can view the data at https://bythenumbers.sco.ca.gov/.

School Contributions to NY Teachers Retirement System To Increase Next Year; Marks 58% Bump Since 2012

The New York State Teacher’s Retirement System announced Wednesday that school district contribution rates will increase by 8 percent next year, rising from 16.25 percent to 17.53 percent.

[The official announcement can be seen embedded at the bottom of this post.]

The new contribution rate doesn’t go into effect until the fall of 2015.

Including the latest increase, school district contribution rates have increase 58 percent since 2012—the contribution rate in 2012 was 11.05 percent, according to the Public Fund Survey.

That’s partially because the System is paying out more pension benefits than ever before; NYSTRS will pay out $6.3 billion in pensions in fiscal year 2014-15, according to the System’s spokesman. In 2009-10, that number was $5.3 billion.

The NYSTRS, once fully funded, has been on a steady decline for years.

The funded ratio has since dropped to 89.8%, according to the most recent data available.

Here’s the official announcement from the NYSTRS:

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