Public pensions are a vital part of American workers’ long-term financial health. Whether they are police officers, firefighters, teachers, or the public servants of our states, counties, and cities, they depend on the 6,276 public pensions across the U.S. to safeguard their hard-earned money. Together, these funds are tasked with managing trillions of public workers’ retirement savings.
Public pension funds are incredibly underfunded. Today, less than one third of public pensions are adequately funded using optimistic actuarial assumptions; no state would be considered adequately funded under market-based measures.
States alone are facing at least $6 trillion in unfunded pension liabilities, leaving millions of American public servants in jeopardy. A pension fund is considered adequately funded when it is about 70% funded. Unfortunately, many states are woefully below that mark. These include Connecticut (47%), Illinois (40%), Missouri (54%) and New Jersey (57%), using optimistic actuarial assumptions. Connecticut, one of the worst states, has an unfunded state pension fund liability of between $30 billion (using optimistic assumptions) and over $100 billion (using more market-based assumptions). Pension beneficiaries deserve to know that their money will be there when they need it.
Current figures don’t inspire confidence that pensions will be adequately funded, and moreover, many don’t take into consideration longer life spans and a realistic rate of return. Compounding the issue is the continued politicization of the public pension funds as a…