Public pensions can be made and kept sustainable for the long haul by incorporating a new tool— sustainability valuation—into funding policies and practices, according to a new study by the National Conference on Public Employee Retirement Systems.

Pension systems can use sustainability valuation to monitor their fiscal status on a continuing basis, gaining insights that would enable them to identify fiscal adjustments needed to stabilize pensions long-term, the study found. The study by Michael Kahn, NCPERS director of research, delineates how sustainability valuation can be applied in a range of areas, including actuarial valuation, plan sponsors’ funding discipline, and sound investment policies.

“At a time when discussions about public pensions tend to be politically charged, NCPERS is committed to developing solutions through strong research and analysis,” said Hank Kim, executive director and counsel of NCPERS. “We are reframing the conversation about unfunded liabilities by grounding it in a deeper understanding of the relationship between pension funds and local and state economies.”

The study, “Enhancing Sustainability of Public Pensions,” shows that if unfunded liabilities were about 3 percent or $141 billion lower than their 2018 level (the latest year for which data are available), they would have been positioned to continue paying benefits without fiscal interruption.

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