Report: Iowa pension fund has $6.8 billion in unfunded liabilities

DES MOINES, Iowa (AP) — Iowa’s largest public employee pension fund has stabilized thanks to solid investment returns but still has $6.8 billion in unfunded liabilities, according to a new report.

The study released Thursday, December 6, 2018 by a consulting firm said the Iowa Public Employees’ Retirement System’s long-term unfunded liabilities will likely grow to $7 billion over the next five years, The Des Moines Register reported. The unfunded liabilities will then begin to gradually decline and fully disappear by 2046, according to the study’s predictions.

The system had an annual investment return of nearly 8 percent, about 1 percentage point higher than its goal, the report said.

“What the whole funding policy is designed to do is to make steady progress,” said Brent Banister, chief pension actuary at Nebraska-based Cavanaugh Macdonald Consulting LLC, which prepared the report. “You don’t turn a big ship around quickly, but when you do you get where you want to go.”

The unfunded liability can be traced to a decade of insufficient pension fund contributions, recessions in 2001 and 2009, and changes in mortality tables, state officials said.

Banister said there’s no concern that the system’s retirees won’t get their pension checks.

“You are in the situation where you can weather a lot of things and you are moving in the right direction,” he told the system’s investment board.

The pension fund has 360,000 members, including current, former and retired employees of state government, cities, counties, school districts and other government agencies.

State Treasurer Michael Fitzgerald, who chairs the investment board, said the report is good news.

“Our pension fund is solid, sound and sustainable,” Fitzgerald said. “Iowans should feel very comfortable with the position that IPERS is in.”

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