Funding Public Pension Plans–Theory and Practice
Funding Public Pension Plans–Theory and Practice
Tuesday, Jan. 25, 2022
ABOUT THIS WEBINAR
The Pension Practice Council’s Jan. 25 webinar, “Funding Public Pension Plans—Theory and Practice,” highlighted the Academy’s issue brief The 80% Pension Funding Myth; explored prudent funding practices; and examined considerations being made in the management of “surplus” for state and local public employee pension plans.
Presenters were Academy Pension Vice President Sherry Chan; Paul Angelo, a member of the Public Plans Committee; and Academy member David Lamoureux. Public Plans Committee Chairperson Todd Tauzer moderated.
Using the issue brief as a starting point, Tauzer laid the groundwork of the discussion in going over the basics of pension funding and a funded ratio. Funded ratios move in economic cycles and can be affected by assumption changes, and are also subject to varying asset valuations and liability measurements, he said.
Plan projections go beyond a point in time measurement and can illustrate plan trajectory, which is a more robust indicator of plan health over time. Nevertheless, funded ratios continue to be used ubiquitously. Tauzer highlighted additional considerations to bring context, like financial health and investment strategy of plan sponsor, history of benefit changes, and adherence to funding policy.
Angelo elaborated on the latter, noting that “If you’re not going to fund the plan, the measurement you use doesn’t matter.” Presenters then led attendees through a brisk dive into funding policy, focusing on governance and professional standards, and providing detail about asset smoothing and amortization methods.
Chan and Lamoureux rounded out the presentation section, bringing the subject matter to life with examples of New York City and California plans, respectively, and sharing their own experiences with them. Chan’s walk-through of a real-world governance structure and its dynamics with respect to agency risk further illustrated concepts laid out by Angelo, while Lamoureux discussed California’s experience with surplus management over the past few decades. Attendees offered up an assortment of questions, ranging from technical questions about smoothing, amortization, and assumption strengthening to current practices and intergenerational equity.
CONTINUING EDUCATION AND JBEA CPE CREDIT
The American Academy of Actuaries believes in good faith that attendance at this live webinar constituted an organized activity as defined under the current Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States, and that attendees may have earned up to 1.8 organized continuing education (CE) credits for attending this live webinar.
We also believe in good faith that Enrolled Actuaries may have earned up to 1.8 continuing professional education (CPE) non-core credits under the Joint Board for the Enrollment of Actuaries (JBEA) rules for attending this live webinar. However, the JBEA ultimately determines what constituted core, non-core, or ethics continuing education and the number of CPE credit hours allocated to same for Enrolled Actuaries.
Please note recent updates to the process for requesting a Certificate of Attendance that were requested by the JBEA. Make sure to review these changes carefully to ensure you are eligible to request and receive your Certificate of Attendance for any Academy webinar.
- All EAs who want to receive a Certificate of Attendance must be registered either as an individual attendee or listed as part of a group registration and must submit their request within two business days of the event. You are still required to attest to your actual attendance for the full webinar in order to receive full JBEA credit.
