[I accidentally closed comments on this post. They’re open now. Sorry!]
* Press release…
The Pew Charitable Trusts today released a new brief detailing state-by-state funding for retirement benefits promised to public workers. The brief, “The State Pension Funding Gap: 2015,” examines data from over 230 public sector retirement plans across the 50 states for fiscal year 2015, the most recent year for which complete data are available. It also provides a preliminary analysis of 2016 data.
The brief finds that gap between the total assets reported by state pension systems across the U.S. and the benefits promised to workers reached $1.1 trillion in fiscal year 2015, the most recent year for which complete data are available. That represents an increase of $157 billion, or 17 percent, from 2014. Investment returns that fell short of expectations proved to be the largest contributor to
the worsening fiscal position, with median overall returns of 3.6 percent.
It also finds that preliminary data for 2016 are also expected to reflect low returns. Based on returns averaging 1 percent for 2016, the pension liabilities are expected to increase by close to $200 billion and reach about $1.3 trillion. Market volatility will also have a significant impact on cost predictability in the near and long terms. Since the end of the Great Recession in 2009, overall median returns for public pension plans have ranged from 1 percent in 2016 to 21.5 percent in 2011. This volatility can be attributed in part to increased investment portfolio risk.
“Many states face significant challenges in meeting pension promises to workers,” said Greg Mennis, director of Pew’s public sector retirement project. “The continued volatility and low investment returns are a reminder that policymakers cannot count on investment returns to close the pension funding gap.”
The brief also looks at net amortization, a metric that can help state and local governments understand whether their funding policies are adequate to reduce pension debt. Net amortization serves as a benchmark to assess contribution policies and helps gauge whether payments to a pension plan are sufficient, both to pay for the cost of new benefits and to make progress on shrinking unfunded liabilities.
The brief can be found here: http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/04/the-state-pension-funding-gap-2015
Detailed, downloadable state-by-state data can be found here: http://www.pewtrusts.org/~/media/Assets/2017/04/PSRS_The_State_Pension_Funding_Gap_2015_Downloadable_Data.xlsx
Five Highest Pension Funded Ratios (2015)
1. South Dakota (104.1%)
2. Wisconsin (98.3%)
3. New York (98.1%)
4. North Carolina (95.5%)
5. Tennessee (95.4%)
Five Lowest Pension Funded Ratios (2015)
1. New Jersey (37.5%)
2. Kentucky (37.8%)
3. Illinois (40.2%)
4. Connecticut (49.4%)
5. Pennsylvania (55.8%)
OK, so the total unfunded liability in 2015 for the entire country was $1.1 trillion. Now, look at the state-by-state data and you’ll see the total unfunded liability for Illinois that year was $111.55 billion. About 10 percent.
As mentioned above, Pew estimates that the national unfunded liability will grow to “about $1.3 trillion” when FY 2016 numbers are in. COGFA recently published the Illinois numbers and found total unfunded liability here to be $126.5 billion. Again, about 10 percent of the nation’s.