The 20 Worst Funded Government Pension Plans in the United States

Alicia Munnell in her new book, State and Local Pensions: What Now?, lists the 10 worst state and local pension plans:

State Plans

1. Illinois SERS (State Employee’s Retirement System)–only 37.4% funded.

2. Kentucky ERS (Employee’s  Retirement System)—only 40.3% funded.

3. Missouri DOT and Highway Patrol—only 42.2% funded.

4. Indiana Teachers—only 44.3% funded.

5.  Connecticut SERS—only 44.4% funded.

6.  Illinois Universities—only 46.4% funded.

7. West Virginia Teachers—only 46.5% funded.

8. Oklahoma Teachers—only 47.9% funded.

9. Illinois Teachers—only 48.4% funded.

10. Rhode Island ERS—only 48.4% funded.

Local Plans:

1. Atlanta Board of Education Fund–only 17.4% funded.

2. Providence Employees Retirement System—only 34.0% funded.

3. Pittsburgh Municipal, Police and Firemen Pension Funds—only 34.3% funded.

4. Little Rock City Police Pension and Relief Funds—only 39.0% funded.

5. Omaha Police and Fire Pension Fund—only 39.3% funded.

6. Dover [Delaware] General Employee Pension Fund—only 43.7% funded.

7. Philadelphia Municipal Retirement System—only 47.0% funded.

8. Little Rock City Firemen’s Relief and Pension Fund—only 48.0% funded.

9. Chicago Municipal Employees Annuity Benefit Fund—only 50.8% funded.

10. Omaha Employees Retirement System—only 52.9% funded.

Munnell writes:

…in 2009 pensions contributions amounted to about 4.6 percent of total state and local revenues.  Assuming an 8 percent return [on pension assets] .and thirty-year amortization beginning in 2014, this rate would rise to only 5.1%. If funding were based on a lower assumed rate, the share would rise further. At 6 percent, pension contributions to fully fund benefit promises would increase to 9.55 of state and local budgets; at 4 percent they would amount to 14.5 percent.

This btw is one reason Bernanke wants to boost stock prices. The higher he gets stock prices, the less pressure there is on state and local governments to make contributions to their pension funds. The problem with Bernanke’s scheme is that he has to keep accelerating the money pumping to prop up the stock prices and at some point this becomes highly price inflationary.

In addition to sitting around for Bernanke to push up stock prices, what else are governments doing to ease the pension burden?

According to Munnell 9 states have already suspended COLA increases for current and future retirees and 31 have reduced benefits for new hires.

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