How to Measure Pension Fiscal Health

The state of retirement funding has become an obvious fiscal concern for city governments, especially since the Great Recession. 

As pension challenges have become more apparent in recent years, local elected officials have increased expectations to ensure the health and viability of their pension plans. As a result, city leaders must be equipped with meaningful data about their city’s plans. Even more important is understanding what the data is telling them about plan fiscal health. 

This Municipal Action Guide, “How to Measure Pension Fiscal Health,” equips city leaders with an understanding of their city’s pension plan data so they can become more effective public sector retirement leaders. Specifically, it assesses the utility and limitations of common fiscal metrics of plan health including unfunded pension liabilities, funded ratio, actuarially determined contributions and net amortization. 

This Municipal Action Guide is a product of NLC’s Public Sector Retirement Initiative, a resource for elected officials to help them navigate the complexities of retirement and healthcare planning and funding for the municipal workforce. 

The Initiative is sponsored by ICMA-RC, an NLC Capstone Corporate Partner and non-profit independent financial services corporation focused on providing retirement plans and related services for over a million public sector participant accounts and approximately 9,000 retirement plans.