PROVIDENCE – The funding levels of Rhode Island’s main public pension programs dropped last year, capping a losing decade for the two retirement funds, a new study has found.
The Employees’ Retirement System of Rhode Island, which covers about 50,000 state workers and local teachers, had enough assets to cover only 58 percent of its total liabilities at the end of 2009. That was down from 61 percent in 2008 and 78 percent back in 2001.
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The Municipal Employees’ Retirement System, which covers roughly 14,500 city and town employees, was in better shape at the end of last year, with enough assets to cover 87.2 percent of liabilities. That was down from 93 percent in 2008 and 118 percent in 2001.
Actuaries consider public pensions adequately funded at 80 percent.
The study was conducted by the Center for State and Local Government Excellence and the Center for Retirement Research, two nonpartisan research groups. The figures for last year are estimates, and because of accounting practices that stretch out losses, they do not include the full impact of recent market declines.
The situation was similar across the country, as public pension funds nationwide took big hits from the market collapse, the study said. Only 36 percent of pension funds could cover at least 80 percent of liabilities at the end of last year.
“While states and localities were on a path toward full funding of their pension liabilities, they were seriously knocked off track by the financial crisis,” the report said.
But with neither increased contributions from governments nor higher tax revenue likely anytime soon, the study’s authors said they did not see much chance for the pension funds to recover over the next few years without a major economic recovery.
The total value of the Employees’ Retirement System was slightly less than $7 billion at the end of last year, according to the general treasurer’s office.
Rhode Island’s pension plans had the fourth-largest funding gap in the nation as of June 2008, according to the Pew Charitable Trusts’ Center on the States. The state had set aside $6.8 billion to cover $11.2 billion in liabilities for state-administered pension plans at that point.
In addition, Rhode Island has promised current and future retirees $788.2 million in health care, life insurance and other benefits, but no money had been set aside to cover those programs as of June 2008, according to Pew.
The supplemental budget for the current fiscal year passed late Thursday by the House Finance Committee includes a provision that would lengthen the amount of time the state gives itself to make up for the pension-funding shortfall.
Additional information is available at slge.org.
