Study: State workers’ pension systems are at their best since 2008 | Economic news
By GEOFF MULVIHILL, Associated Press
The pension systems of state civil servants in the United States are in their best shape since the start of the Great Recession more than a dozen years ago, according to a study released Tuesday.
The Pew Charitable Trust report attributes a booming stock market over the past year as well as longer-term state actions including increasing taxpayer contributions to public pension funds and cutting pension benefits promised, especially for newly hired workers.
âThe best decisions, fiscal discipline, is something that states can continue to do next year and the year after,â said David Draine de Pew, one of the report’s authors. âYou can’t expect one-time returns in a generation to happen again. “
The health of public pension systems resonates beyond government employees. When systems are poorly funded, state and local governments should consider raising taxes or cutting basic government services to pay retiree pensions.
Pew estimated that public pension systems have enough assets to pay more than 80% of their obligations, the first time since 2008 that they have been so well funded.
The stock rally that followed a free fall when the coronavirus pandemic began in 2020 has been a major factor in the replenishment.
States have also contributed more to taxpayer dollars. Pew found that in 2014, only 17 states were contributing enough to stabilize or reduce their retirement debt. But in 2019, the latest year for which full data was available, 35 states were contributing at this level.
Pew also found that the four states with the most threatened retirement systems – Illinois, Kentucky, New Jersey and Pennsylvania – had increased their contributions, with average annual growth of 16%.
The Illinois and New Jersey plans still had just under 40% of their required funding in 2019, Pew found. Kentucky’s funding level was under 45% and Pennsylvania’s was 58%.
South Dakota and Wisconsin had fully funded public pension systems, and several other states were near that level.
Pew’s study looked at pension systems managed or funded by state governments. In some states, pension funds for local governments and school districts are in worse shape.
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