Taxpayer-funded contributions to government pensions can make up one the largest single elements in a local budget. Manhattan Institute scholars have consistently pushed for governments to reform their pension system and thus avoid the necessity of cutting public services.
Absent significant reforms, unfunded liabilities of state-administered pension plans will continue to grow and threaten the financial security of state retirees and taxpayers alike. The fiscal calamity could be far deeper and prolonged than the Great Recession.
As the world’s population lives longer, it will become increasingly important for plan sponsors, retirement advisors, regulators, and financial firms to focus closely on how older persons fare in the face of rising difficulties with cognition and financial management.
On the basis of its fiscal solvency in five separate categories, Connecticut ranks 37th for fiscal health among the US states—a significant jump from last year’s ranking of 50th.
The latest PPD update features: Expanded 2016 plan data. The creation of a new “Colorado State and School” plan for years 2001 to 2004. Colorado state legislation enacted in 2004 (Senate Bill 04-257) provided for the separation of the Colorado State and School Divisions. To better reflect this policy change, data for Colorado State and […]
Covering 14 million state and local government employees, public pension plans typically provide lifetime retirement benefits based on years of service and the salary earned near the end of a career. These pensions provide meaningful retirement security to employees covered by a plan for a full career, but offer few benefits to shorter-term employees, a drawback that is becoming increasingly problematic as people change jobs more frequently.
According to preliminary 2015 data, state and local pension debt now exceeds a combined $1.5 trillion. Strong returns on investment (averaging 17 percent in 2014) have helped to reduce the debt, but the message is still clear: many states are facing a pension crisis.
The table below displays benefit rules for the state-administered plans in our database.
Many states and municipalities are struggling to fund defined benefit pension plans for their employees. Between 2009 and 2013, in order to improve their pension status, almost every state implemented some combination of lower benefit accruals and higher employer or employee contributions. Numerous cities made changes as well for similar reasons.
The gap between the total assets reported by state pension systems across the United States and the benefits promised to workers, now reported as the net pension liability, 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.