In much of the country, public pension funding has been one of the most persistent public policy problems. For years, many state governments have failed to make necessary investments in their retirement system, resulting in funding gaps that increasingly present a looming reckoning for taxpayers. Accordinââg to a recent report published by The Pew Charitable
In much of the country, public pension funding has been one of the most persistent public policy problems. For years, many state governments have failed to make necessary investments in their retirement system, resulting in funding gaps that increasingly present a looming reckoning for taxpayers.
Accordinââg to a recent report published by The Pew Charitable Trusts, a public policy think tank, many states are now taking earnest measures to reduce their pension funding gap. These measures include increased contributions, cost reduction strategies, and more sophisticated pension management tools. States have also benefited from once-in-a-generation investment returns following the COVID-19 market crash in March 2020.
Still, based on 2019 data, the most recent year of available comprehensive data, the majority of states have a funding shortfall of 25% or more.
Illinois has the most underfunded pension system in the United States. Illinois’ state pension system has liabilities totalling $237.9 billion, yet only $92.6 billion in pension assets — enough to cover only 38.9% of its obligations to retired state workers.
One of the largest challenges Illinois faces in closing its $145.3 billion pension gap is the mandated cost of living adjustments. Retired state employees in Illinois receive a 3% annual cost of living increase, regardless of the actual inflation rate.
All pension funding data used in this story was compiled by The Pew Charitable Trusts and is for 2019. We also considered public-sector, state-level employment, both in raw numbers and as a share of overall employment, using data from the Bureau of Labor Statistics.
RankStatePension funding ratioPension assets ($, billions)Pension liabilities ($, billions)State government employees1Wisconsin103.0%112.1108.989,8002South Dakota100.1%12.512.517,3003Tennessee98.2%41.141.895,5004Washington96.3%100.9104.8142,7005New York96.1%215.2223.9254,6006Idaho94.6%17.718.830,1007Nebraska93.1%15.216.342,5008Utah91.7%35.238.481,2009North Carolina88.4%101.4114.6196,10010Iowa85.4%34.840.767,10011Maine84.3%15.117.924,60012Delaware83.4%10.212.232,20013West Virginia83.4%15.919.146,90014Minnesota82.2%70.886.198,90015Oklahoma80.7%33.241.179,70016Oregon80.2%70.287.541,30017Arkansas80.0%28.635.776,20018Ohio80.0%168.4210.5168,00019Georgia78.7%95.6121.6162,50020Florida78.2%163.9209.5246,40021Missouri77.8%59.977.0100,20022Virginia77.2%79.8103.3157,30023Nevada76.5%44.357.940,20024Wyoming76.5%9.011.813,60025Montana72.5%11.916.427,40026California71.9%474.3659.4521,60027Maryland71.6%54.375.8108,10028Kansas69.9%20.629.550,70029North Dakota69.8%5.98.421,40030Alabama69.4%38.555.5117,00031Texas69.0%186.8270.7426,40032Indiana68.6%30.844.9108,90033Alaska67.4%15.222.622,50034New Mexico67.3%29.243.453,70035Louisiana66.9%36.854.986,80036Colorado66.5%51.877.9126,60037New Hampshire65.5%9.214.122,40038Arizona65.2%49.976.689,80039Vermont63.7%4.57.117,80040Mississippi61.7%28.646.457,40041Michigan61.1%65.0106.4178,80042Massachusetts59.4%58.398.1122,60043Pennsylvania58.0%89.8154.8148,60044South Carolina55.4%32.358.3103,50045Hawaii54.9%17.231.467,00046Rhode Island54.5%6.612.120,40047Kentucky44.6%24.053.790,80048Connecticut44.4%32.072.171,00049New Jersey39.7%82.3207.1138,70050Illinois38.9%92.6237.9147,000