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Funding Status Projections for Southern Public Teaching Pension Plans

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  • William Trainor
  • Carolyn Rochelle

Abstract

The average funding status for eleven southern state pension plans used by teachers as of 2005 is 86%, which translates into over a $40 billion shortfall. Employing Monte Carlo simulation, this study projects the expected future funding status along with confidence intervals for each of these states over the next 10 years. Projections suggest the average underfunding will remain virtually the same based on current state pension contributions and asset allocations. However, if underlying pension asset returns fail to meet expectations due to high funding risk, the average underfunding could fall to 73%, a shortfall of over $150 billion. Copyright International Atlantic Economic Society 2008

Suggested Citation

  • William Trainor & Carolyn Rochelle, 2008. "Funding Status Projections for Southern Public Teaching Pension Plans," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(1), pages 77-87, March.
    • Handle: RePEc:kap:atlecj:v:36:y:2008:i:1:p:77-87
    DOI: 10.1007/s11293-007-9092-8
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    References listed on IDEAS

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    1. Irwin Tepper, 1981. "Taxation and Corporate Pension Policy," NBER Working Papers 0661, National Bureau of Economic Research, Inc.
    2. Tepper, Irwin, 1981. "Taxation and Corporate Pension Policy," Journal of Finance, American Finance Association, vol. 36(1), pages 1-13, March.
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    Cited by:

    1. Don H. Chamberlain & L. Murphy Smith & Randall B. Bunker, 2016. "An examination of US state pensions by total state expenditures, state budget deficit and red v. blue state," International Journal of Economics and Accounting, Inderscience Enterprises Ltd, vol. 7(1), pages 27-44.

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    More about this item

    Keywords

    Funding status–pension plans; Funding projections–pension plans; E37; G23;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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