Brigham Young University Macroeconomics and Computational Laboratory Working Paper Series No. 2012-01
29 Pages Posted: 14 Apr 2012 Last revised: 23 Aug 2012
Date Written: April 1, 2012
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
JEL Classification: C63, C68, E37
Suggested Citation: Suggested Citation
Evans, Richard W. and Phillips, Kerk, Simulating Utah State Pension Reform (April 1, 2012). Brigham Young University Macroeconomics and Computational Laboratory Working Paper Series No. 2012-01. Available at SSRN: https://ssrn.com/abstract=2039492 or http://dx.doi.org/10.2139/ssrn.2039492