Date of Award
8-2021
Degree Type
Doctoral Dissertation
Degree Name
Doctor of Business Administration (DBA)
Department
Jack Welch College of Business
Dissertation Supervisor
Dr. Lucjan T. Orlowski
Committee Member
Dr. Lawrence Hatheway
Committee Member
Dr. Khawaja Mamun
Abstract
The main purpose of this study is to identify the key determinants of the unfunded liability (UL) for state and local public Defined Benefit (DB) pension plans. The UL is a measure of pension debt in plans across the U.S. This debt continues to rise while pension obligations to current and future retirees must also be satisfied. The UL is derived by subtracting the market value of plan assets from its accrued liabilities. If assets are less than liabilities, it signals a lack of funds set aside to cover all pension benefits and generates what is known as an unfunded liability on the financial books of many states across the country. If assets exceed liabilities, a plan is considered fully funded. The pension and employee benefits committee noted that full funding does not usually imply that the pension plan has sufficient assets to cover its solvency liabilities (unless the funding objective is to achieve a solvency level of funding.)1 Throughout my manuscript, I will refer to the unfunded liability (UL) as the actual accrued liability and refer to the unfunded liability gap (ULG) as an expression of the financial factors that could help to reduce the liability. The contributing factors to receive a DB pension benefit, involves a combination of both the plan design and fiscal health of pension plans. Plan design can range from elements of retirement requirements such as age, years of service, average salary, service credits, mandatory employee contributions, while fiscal health includes parameters that measure the financial impact of the pension liability. Examples include and not limited to, employers’ contributions, tax revenue per capita, Gross Domestic Product (Real GDP) per capita, budget surplus, discount rates and other investment measures.
JEL Classification
H55; H75; H72; H55; G11
Recommended Citation
Jemison, S. M. (2021). Which financial measures can be leveraged to help close the unfunded liability gap for state pension plans? Jack Welch College of Business & Technology dissertation, Sacred Heart University, Fairfield CT.
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Included in
Business Administration, Management, and Operations Commons, Finance and Financial Management Commons, Public Administration Commons, Public Economics Commons
Comments
In partial fulfillment of the requirements for the degree of Doctor of Business Administration in Finance Sacred Heart University, Jack Welch College of Business and Technology, Fairfield, Connecticut.