On March 30, 2011, at the
Academy’s invitation, Ken Kent,
a former Academy vice president
for pension issues and a pension
North, Rizzo, Kent, and Connor
actuary with Cheiron in
McLean, Va., Robert North, chief
actuary for the New York City
Retirement System, and James
Rizzo, a consulting actuary
with Gabriel Roeder Smith &
Co. in Fort Lauderdale, Fla.,
participated in a spirited round-table discussion on funding
public pension plans. That
conversation, moderated by Bill
Connor, a freelance journalist
who conducts media training
for the Academy, ran for several
hours. What follows is an edited
transcript of their exchange. A
video of the entire discussion
is available on the Academy’s
website, www.actuary.org.
The State of Public Pension Systems in 2011
JAMES RIZZO: The economy is the largest substantive issue that’s
facing the systems—not only the markets recovering from ’08 and ’09 but
also government revenue sources that have been affected. Governments are
being pressed from both sides on this.
ROBERT NORTH: Public plans in recent years have been subject to
a lot of misunderstanding, demagoguery, and generally bad press. And a
lot of that really is misdirected. Contributory defined benefit (DB) plans,
which most public plans provide, are one of the best designs possible for
meeting the needs of long-service workforces that are typical in the government sector.
As people look at the realities, public plans do a good job. They can do
better; there can be more transparency, more disclosure. But in general,
there is no better system for delivering retirement income to attract a good,
effective public-sector workforce.
KEN KENT: We can’t trivialize the challenge of finding money to recover
market losses in these large, mature systems and also finding funds to allow
for recovery in the regions that those governmental systems oversee. The
retirement systems were set up to mitigate financial volatility. This latest
market has caused that to be exacerbated. But there’s been heightened discussion with the public plans about reducing their risks, and at the same
ShuTTERSToCK
time, costs may be barely sustainable at these elevated levels. All with the
goal of reducing the probability of costs going further up. I think that risk
reduction is going to be a continuing trend.
