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[QUOTE=Jim in CT;851337]What he said...
Here in CT
here in RI
Rhode Island Pension Board Widens Funding Gap 27% by Lowering Return Rate
By Michael McDonald - Apr 14, 2011 12:01 AM ET
Rhode Island’s unfunded public pension liabilities for teachers and most state workers jumped about 27 percent after the board overseeing the retirement system voted to cut the presumed rate of return on assets.
The fund lacks about $6.83 billion to meet projected needs, up from about $5.4 billion before overseers yesterday cut return expectations to 7.5 percent a year from 8.25 percent, according to Treasurer Gina Raimondo. The plan, with $7 billion in assets as of Nov. 30, covers more than 50,000 people.
“It’s a big deal,” said Raimondo, a Democrat who heads the Employees’ Retirement System of Rhode Island board and voted for the change. “I believe it was the right thing to do.”
The move may drive state taxpayers’ fiscal 2013 obligation to the system up 33 percent, to $622 million, from what had been projected, Raimondo said. The pension’s funding ratio, or the proportion of assets to projected liabilities, fell to about 48 percent from 54 percent. Actuaries consider at least 80 percent the level needed to ensure adequate coverage.
The system’s “current real rate-of-return assumption is not justified by asset allocation and forward-looking expected returns by asset class,” consultants from Gabriel Roeder Smith & Co. said in a report that recommended cutting the projections. The nominal rate adopted yesterday includes 5.15 percent on invested assets net of expenses and 2.75 percent for inflation, as recommended by the Irving, Texas-based advisers.
Rhode Island joins states from New Jersey to California and Illinois that face unfunded pension liabilities estimated to be as much as $3.6 trillion, when city plans are included. The Ocean State was ranked sixth-worst, based on assets as of Aug. 20, in data compiled by Bloomberg. Based on data from fiscal 2009, its pension plans had a funding ratio of about 61 percent
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