State Funded Ratios Over Time

Commentary

State Funded Ratios Over Time

The evolution in funded ratios for state pension plans from 2001-16

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The map above shows how the funded status of defined benefit pension plans have evolved over the past 15 years. Each state’s funded ratio is a weighted average for the largest state-administrated pension plans in that particular state. A funded ratio is simply a measurement of how much a pension plan has saved relative to the benefits it has promised, the percentage is calculated by dividing the market value of assets by the actuarial value liabilities (i.e., the net present value of promised pension checks).

States that report fully funded pension plans (100% or more) are depicted in shades of green. Funding ratios ranging from 70% to 99% are displayed in shades of yellow/orange, while any state that falls below a 70% funded ratio appears in shades of red.

We determined each state’s funded ratio by totaling up the reported actuarially accrued liabilities and market valued assets and then calculating the funded ratio (as opposed to taking the average of funded ratios in the state). This allows for weighted average results based on each plan’s liabilities.

Anthony Randazzo

Anthony Randazzo is a senior fellow at Reason Foundation, a nonprofit think tank advancing free minds and free markets.

Anil Niraula is a policy analyst at Reason Foundation.

Zachary Christensen is a policy analyst for Reason Foundation's Pension Integrity Project.