2015 Pensions Policy
The state should disclose all financial and other data necessary for policymakers, school districts and the general public to have a clear and accurate depiction of the current standing and future health of the system. State teacher retirement systems als
Teachers, policymakers and taxpayers deserve accurate and reliable information about the costs and benefits of the public pension systems they support.
Just as teachers can easily obtain their salary schedules, they should have access to information about pensions so that they can make informed decisions about their career and retirement futures. While South Dakota provides teachers with an annual benefits statement, the report includes limited information about the value of pension benefits. South Dakota does not provide teachers with information on how their benefits accrue for each year of service, the amount contributed each year by teachers and employers on behalf of teachers, or the projected value of a teacher's contributions based on different assumptions about the rate of return expected (e.g. 4%, 6%, and 8%). South Dakota provides teachers with some information on how their benefits accrue at certain key points in the teacher's career related to retirement eligibility. It would be better, however, if it also reported the value of the stream of benefits that might accrue over one's expected lifetime for all or most points in the future for a teacher's career. While South Dakota also reports the amount of the teacher's contributions and the employer contributions made on the teacher's behalf, it does not provide teachers with transparent information about the opportunity cost of leaving contributions in the system by reporting how much might be earned if teachers were to put contributions into a personal retirement savings account.
Public disclosures on teacher pensions in South Dakota also lack some transparency. South Dakota's pension plan is fully funded, meaning it doesn't report information about unfunded liabilities.
The Government Accountability Standards Board (GASB) requires public retirement systems to disclose who makes employer contributions, and the proportion of total contributions for which each contributor is responsible. All states' pension systems collect this information, and South Dakota makes these data readily available.
South Dakota, like most states, reports the portion of total pension contributions that is normal cost and the proportion that is amortization cost. However, the state does not report information about whether it has taken on debt in order to pay for current or future retiree benefits (e.g. through pension obligation bonds or other instruments for raising capital). Even if the state has not taken on debt, it should disclose this information to the public as it is an important indicator of the state's overall health and stability.
South Dakota Retirement System. Actuarial Valuation, as of June 30, 2015. South Dakota Retirement System. Schedule of Employer Allocations and Collective Pension Amounts June 30, 2015.
Provide teachers with the information necessary to understand their retirement benefits.
South Dakota should provide much more detailed information to teachers about how their benefits accrue at different points during their careers, as well as information about the opportunity costs related to any contributions made into the system.
Report to policymakers and the public data that give a complete representation of the system's financial health.
The state should disclose in its reports whether or not the system has taken debt service to pay for retirement benefits.
South Dakota was helpful in providing information that enhanced this analysis.