These graphs are intended to supplement the Select Measures of Pension Risk table. 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.

As with the risk measurement tables, we display the risk assessment graphs under two sets of assumptions (Current Law and Past Practices).

• Current Law – Where we assume all plans receive the full, actuarially required contribution amount (subject to certain assumed maximums) and benefit provisions remain unchanged over time.
  
  
• Past Practices – Where we assume all plans receive a percentage (less than 100 percent) of the actuarially required contribution and the Legislature enhances benefit provisions in the future consistent with past practices.

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).

In the Percentage of GF-S Allocated to Pensions graphs, 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.

Relative to the “Current Law” graph, the percentage of GF-S allocated to pensions is higher under “Past Practices” primarily due to assumed enhancements in benefit provisions. The assumed enhancement in benefits raises the expected cost of the plans while the underlying projected state revenues does not vary between Current Law and Past Practices.

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.

In the Closed Plan Funded Status graphs, 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.

For the Open Plan Funded Status graphs, 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.

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 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.

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.

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: 12/14/2022

Last Updated: 12/14/2022