These graphs are intended to supplement the Select Measures of Pension Risk table and the 2016 Risk Assessment Assumptions Study. We do not advise readers to use (or distribute) the graphs without understanding the purpose of the risk analysis and without understanding the data, assumptions, and methods used to prepare the analysis.

Affordability Measure

For the Select Measures of Pension Risk table, we select two measures of affordability: the chance of pensions either half or double their current share of the General Fund-State (GF-S).

Percentage of GF-S Allocated to Pensions

In the Percentage of GF-S Allocated to Pensions graph, we compare the projected amount of pension contributions from the state, as an employer, to projected GF-S revenues by year under varying outcomes.

The varying outcomes range from very optimistic (5th percentile) to very pessimistic (95th percentile). We also include optimistic (25th percentile), expected (50th percentile), and pessimistic (75th percentile) outcomes.

Under optimistic/pessimistic outcomes, we observe a lower/higher percentage of GF-S revenues allocated to pensions than expected. Higher than expected future contribution rates combined with lower than expected GF-S revenue growth produce the very pessimistic outcomes we observe in the graph. Lower than expected future contribution rates combined with higher than expected GF-S revenue growth produce the very optimistic outcome.

Solvency Measures

For the Select Measures of Pension Risk table, we select two measures of solvency: the chance of pay-go (premature trust fund exhaustion) and chance of funded status below 60 percent. We also prepare separate measurements for the closed plans (closed to new members) and the open plans.

Closed Plan Funded Status

In the Closed Plan Funded Status graph, we display projected funded status by year under varying outcomes. The funded status represents the ratio of the actuarial value of assets to the present value of accrued benefits at a single point in time. For this graph, the closed plans include PERS 1 and TRS 1 combined.

Under optimistic/pessimistic outcomes we observe higher/lower than expected funded status.

Open Plan Funded Status

For the Open Plan Funded Status graph, we display the same information as the Closed Plan Funded Status graph except we include only the open plans (and WSPRS Plan 1).

Under optimistic/pessimistic outcomes we observe higher/lower than expected funded status.

Pay-Go Measures

For the Select Measures of Pension Risk table, we measure the maximum chance of pay-go that we observe in our model for the given time period. We define a plan as in “pay-go” when its trust fund is exhausted and the plan has at least $50 million of annual benefit payments remaining in present value dollars. Similar to the funded status measurements, we also measure this risk separately for the open and closed plans.

Closed Plan Pay-Go

In the Closed Plan Pay-Go graph, we display the maximum chance of pay-go for each year in our projection. We also display the projected annual benefit payments for each year if past practices continue in the areas of meeting funding requirements and enhancing benefits via legislation. For this graph, the closed plans include PERS 1 and TRS 1 combined.

We expect the benefit payments for the closed plans to decrease in the future as the retiree population declines.

Open Plan Pay-Go

The Open Plan Pay-Go graph reflects the same information as the Closed Plan Pay-Go graph except we include only the open plans (and WSPRS Plan 1).

We expect the benefit payments for the open plans to steadily increase in the future as the retiree population increases.

Last Reviewed: 02/26/2018

Last Updated: 02/26/2018