August 19, 2010

Q&A: Is prefunding of the retiree health unfunded liability necessary?

No, it is not necessary. The first priority is to address the unfunded liability for pension benefits. Today no public employer is attempting to fund the accrued liability cost of retiree health benefits at the 100 percent level. The best funding level is between 20 and 30 percent. There are a number of issues to be considered: does the University pre-fund, at what level, and for the total liability, the normal cost, or the required contribution?