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What Did You Find Most Interesting in Basics of Pension Funding?

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- The most important assumption that a pension board of trustees will choose is the assumed rate of return.
- Unfunded liabilities are a shortfall between the assets a pension fund should have on hand and the value of promised benefits. The shortfall is owed to the pension system to pay benefits, which is why it’s also called pension debt.
- It is a bad idea for a state to target anything less than a 100% funded ratio for pension plans. Settling for less can become very expensive over time as debt adds up.
- Sometimes the total amount of money that you and your employer contribute is not enough to pay guaranteed benefits because the anticipated investment returns on that money underperformed. The government then has to make up the difference with debt payments.
- Most states do not have well funded teacher pension plans. But a few states do have fully funded teacher pension plans, showing it can be done.
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