State pension plans face continuing and growing challenges in fulfilling the promises they have made to their employees — to the tune of a collective $915 billion. The Pew Charitable Trust has issued a new report that serves as a wake-up call to state governments, but it does contain a kernel of hope.
The report says that the unfunded liability of state pension plans has grown steadily: in 2008, it was $452 billion; in 2010, $757 billion; and in 2012, $915 billion. Pew attributes these results to states’ ongoing reports regarding the effects of their heavy losses during the Great Recession in 2009.
The news is not all bad. Between 2011 and 2012, 39 states’ funded ratio fell; it held steady in eight states and rose in three. In addition, Pew says that recent returns on investments states have made with pension funds have been strong; it also notes that many states have enacted fiscal reforms.
Pew says that if states meet investment return goals and make the pension plan contributions they are supposed to, funding levels will rise. But it adds a note of caution, warning state plan sponsors and administrators to remember that returns on investments are not guaranteed.
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John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net web portals.
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