FRS Pension Funds Decline â€“ Benefits Not Impacted
As expected, with a stock market in steep decline, the value of the FRS pension fund has declined to $120.4 billion. This represents 93% of the liabilities or promised benefits. Ennis Knupp and Associates, a financial consulting firm, made this report yesterday at a meeting of the Investment Advisory Council of the State Board of Administration (SBA). The SBA invests Floridaâ€™s FRS funds.
Fortunately for retirees and our members, not all of the money would be withdrawn at once, meaning there is no risk that the fund will go bankrupt or that Floridians won’t receive their benefits. Remember, there is a liability for any employee who has vested (six years service) no matter their current age. Because FRS and other pension plans will not pay out every penny at once, many state pensions are far from fully funded. Florida’s is actually considered among the strongest in the country.
A Standard and Poorâ€™s report on state pension funds using 2007 data, ranked Florida as the third best fund in the country, behind Oregon and North Carolina. Illinois, Oklahoma and Rhode Island were at the bottom of the list, with their pensions all funded below 62 percent.
From 1985 to 1997, Florida’s pension fund was underfunded, but rose from a 54.3 percent funding level to 91.3 percent. It then rode the economic boom of the 1990s and early 2000s, and at its highest point in 2000, the pension was funded at 118.1 percent of liabilities.