CCA President Moderates Live Webcast Recognizing Award Winners
March 1, 2022
National Institute on Retirement Security and Conference of Consulting Actuaries Announce Winners of New Innovative Public Pension Funding Strategies Award
The National Institute on Retirement Security (NIRS) and the Conference of Consulting Actuaries (CCA) today announce three submissions as winners of the new award competition: Innovative Public Pension Funding Strategies.
Each of the winning submissions selected by an esteemed panel of judges will receive a $5,000 award. The winning submissions will be presented today, Tuesday, March 1st at 10:30 a.m. ET, at the NIRS 13th Annual Retirement Policy Conference.
“The award competition achieved its goal,” said Ellen Kleinstuber, an award judge, chief actuary with Bolton, and CCA president. “The winning submissions have provided innovative thinking around public pension funding strategies, grounded in the principles set forth in the CCA’s 2014 public pension plan funding whitepaper, that can foster ideas for plans across the country.”
“This was a productive collaboration with CCA that resulted in a broad array of new ideas and thinking on public pension funding,” said Dan Doonan, NIRS executive director. “We appreciate the efforts of all the submitters and the judges, and extend our congratulations to the winners.”
Winning Submissions
- The Cost of Stability: A Case Study by Robert (Andy) Blough, FSA, EA, MAAA, FCA and Seth Stock, MBA. The funding policy is a simplified version of an existing strategy used at the Indiana Public Retirement System, and it prioritizes benefit security and rate stability. While it was designed for multiple-employer cost-sharing pension plans, it works equally well for a single-employer plan. Read the funding plan.
- Risk-Based Funding Policy by Bill Winningham, Michelle Boyles, Aaron Shapiro, and David Kent. This Risk Based Funding Policy uses a standard normal cost, plus layered amortization approach. However, the amortizations are based on the funding policy liability, which equals the accrued liability adjusted by a risk load factor. It also utilizes a Contribution Surplus Account to stabilize costs over time. Read the funding plan.
- Reserve Fund Stabilized Contribution Policy—A Model Public Pension Funding Policy by David Draine. The Reserve Policy is a potential funding policy for state and local sponsors of pension benefits that builds on standard actuarial funding approaches to achieve greater predictability in contribution rates. The policy has similarities to the funding policy used in Tennessee’s hybrid pension plan design as well as the pre-funding trusts and side accounts available to employers participating in CalPERS and Oregon PERS, respectively. It also features a transition strategy for existing plans or tiers. Read the funding plan.
The purpose of the competition was to spotlight innovative ideas on state and local pension funding policies that can reduce cost volatility, promote intergenerational equity, and assure that pension plans remain on a strong fiscal path over time.
While the vast majority of pension plans are well-funded, costs can vary over time due to a number of factors. Currently, public pension plans are reporting strong investment returns, but stock market volatility, demographic changes and other factors can affect future costs. For the competition, entrants were given a hypothetical pension scenario and asked to design a funding policy.