Wealth Not Guarantee of Strong State Pension Funding

Wealth does not always equal solvency — at least as far as states’ per capita income versus how well-funded their pension obligations is concerned, according to a recent report. A Wall Street Journal report shows that simply having a surfeit of high-income residents does not necessarily translate to full — or even close to full — state pension funding and suggests that other factors affect how well-funded they are.

The report cites Fitch Ratings analysis of Bureau of Economic Analysis data on states’ per capita income and National Association of State Retirement Administrators’ (NASRA) analysis of data from states on their pension obligation funding levels.

The Fitch analysis says that the 10 states with the highest per capita income are:

1. Connecticut
2. Massachusetts
3. New Jersey
4. North Dakota
5. New York
6. Wyoming
7. Maryland
8. Alaska
9. New Hampshire
10. Virginia

Of those, only New York is among the 10 states with the highest pension obligation funding levels, and only Wyoming accompanies it in the top 20. However, four of the 10 states — Alaska, Connecticut, New Hampshire and New Jersey — are among the 10 states with the lowest pension obligation funding levels.

Conversely, a low per capita income does not mean that a state is guaranteed to have funding problems. Four of the 10 states with the lowest per capita income — Arkansas, Idaho, Utah and West Virginia — are among the top half of states regarding pension obligation funding levels.
NASRA ranks the 10 states that have the highest funding levels as follows:

1. South Dakota
2. Wisconsin
3. Washington
4. North Carolina
5. Oregon
6. Tennessee
7. Idaho
8. Delaware
9. New York
10. Florida

Of those, only New York is among the 10 states with the highest per capita income. Two more, Delaware and Washington, are among the top 20 regarding income. Only one of the top 10 regarding funding, Idaho, is among the 10 states with the lowest per capita income.