Simulating Utah State Pension Reform

Richard Evans and Kerk L. Phillips
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Kerk L. Phillips: Department of Economics, Brigham Young University

No 2012-01, BYU Macroeconomics and Computational Laboratory Working Paper Series from Brigham Young University, Department of Economics, BYU Macroeconomics and Computational Laboratory

Abstract: In 2008, the Utah Retirement System experienced a negative return of almost 25 percent on its portfolio. This resulted in an underfunding of the pension system. In 2010 the Utah legislature reformed state pension participation, placing all new employees hired after mid-2011 in a new hybrid pension system. Employees hired prior to July 2011 continue to participate in the previous defined benefits program. This paper models and simulates the effects of Utah's pension reform on the balance in the defined benefits fund. In our baseline simulations, we find that the recent reform has extended fund solvency, but not eliminated the threat. Our simulations show that there is at least a ten percent chance of pension fund insolvency sometime in the next two decades.

Keywords: Pension reform; Numerical simulation; Simulation modeling; State pensions; Utah (search for similar items in EconPapers)
JEL-codes: C63 C68 E37 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2012-04
New Economics Papers: this item is included in nep-age, nep-cmp and nep-lab
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:byu:byumcl:201201

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