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.
View the article: Mercatus Center: Ranking the States by Fiscal Condition 2017 Edition
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 School plans are reported as a single entity from 2001 to 2004, and separately from 2005 forward.
View the public plans data: Center for Retirement Research at Boston College: Public Plans Data 2017
- The state of Washington currently has $114 billion in assets and $13.8 billion in unfunded liabilities.
- The Tax Foundation ranks Washington #9 in the United States in terms of pension fund health
- The Washington State pension fund covers 84% of liabilities based on an assumed rate of return of 7.7%.
- According to ALEC however, using a more conservative rate of return, the Washington pension system is just 36% funded. ALEC uses a risk-free return rate of 2.142% (the yield of an average U.S. Treasury bond.)
Updated June 2019 based on 2017-18 data.
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.
View the article: Tax Foundation: How Well Funded are Pension Plans in Your State?