Public pensions have been in the news a lot recently. You may hear talk of looming pension crises in other states. These are local, not national, issues. In Utah’s case, URS is considered one of the most well-managed and well-funded public pensions in the nation.

There isn’t a perfect way to measure the overall health of a pension fund, but “funding ratio” is the one of the best metrics. Funding ratio, in simple terms, demonstrates a pension fund’s proportion of assets to liabilities.

A major study by Pew Charitable Trusts in 2016 compared the funding ratios of state pensions across the nation. URS ranked No. 8 among the 50 states, with a funding ratio of 86% at the time. Two states had the nation’s lowest funding ratio of 31%. Five states had pension plans that were less than 50 percent funded. These are the types of states experts generally refer to when they warn of future pension problems.

The study showed more than half the states had pension plans that were less than two-thirds funded. And all state pensions were less than 100% funded at the time of the study, the latest of its kind. A year later, URS’ funding ratio increased to almost 90% on a fair market value by the end of 2017.

At first glance, you might wonder if a funding ratio of less than 100% is problematic. That’s not necessarily the case. The funding ratio, essentially, compares the funds you have on hand today with what you’ll need to pay long-term liabilities in the future. The question is, will you have the funds you need at the time you need them? In our case, we’re comfortably on track. Not everyone will retire tomorrow. While URS is on an anticipated path to reach 100% funding status soon, pension liability is a long-term liability, like a mortgage. Much of that liability will be paid with future investment earnings. In fact, the average portion of benefits paid through investment returns over the past 20 years is 64%.

Many pension funds that are in trouble have not received the full amount of contributions from their participating employers, which, compounded by losses in investments, leads to significant underfunding. Our participating employers share our long-term perspective and value careful funding today for the sake of a healthy, sustainable pension fund tomorrow. Additionally, URS’ careful investment management has helped the pension fund realize steady investment returns throughout the years.

URS is frequently recognized for prudent management of the pension fund. For example, this recent article in the Salt Lake Tribune shows that URS ranked third among 163 U.S. public pension plans for its private equity investments.

URS’ pension asset allocation is designed to meet long-term obligations, protect your benefits, and minimize risk and volatility. Thanks largely to our elected officials’ commitment to responsible benefit and funding requirements, your pension is healthy and well-funded. You can rest assured that you’ll receive your promised retirement benefits.