U.S. state public employee retirement systems were able to shave $35 billion off their unfunded liabilities in fiscal 2014 due mostly to strong investment returns, leaving a shortfall of $934 billion, according to a study published on Wednesday.
However, that gap between retirement benefits promised to workers and available funding is expected to widen to more than $1 trillion in fiscal 2015, according to the study from the Pew Charitable Trusts.
For an interactive map with Pew's fiscal 2014 state pension funding data, click HERE.
The study assumes investment returns averaging just 3 percent in 2015, compared to returns in 2014 of 17 percent. The report is based on the most recent data from all 50 states.
For fiscal 2016, which ended on June 30 for most states, the pension funds had negative average returns in the first three quarters.
"Low investment returns in 2015 and 2016 show that you can't invest your way out of this," said David Draine, senior research officer at Pew.
That is bad news for states with funded ratios below 50 percent: Illinois and Kentucky, the two lowest at just 41 percent, and New Jersey at 42 percent. An 80 percent funded level is generally considered to be healthy.
The highest funded ratios were in South Dakota at 107 percent, Oregon at 104 percent and Wisconsin at 103 percent.
States with the worst shortfalls
- 1. Illinois and Kentucky 41% funded
- 2. New Jersey: 42% funded
- 3. Connecticut: 51% funded
- 4. Alaska and Pennsylvania: 60% funded
- 5. Rhode Island and South Carolina: 61% funded
States with the best funded pension plans
- 1. South Dakota: 107% funded
- 2. Oregon: 104% funded
- 3. Wisconsin: 103% funded
- 4. North Carolina and Tennessee: 99% funded
- 5. New York: 98% funded
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