Pension Report Sees Growing Divide Between Best, Worst-Funded State-Level Systems

A report by the Center for State and Local Government Excellence shows the best-funded state pension plans are receiving better ongoing commitments than the lesser-funded ones. Maryland rated in the middle section of this study.

The report, tracking though FY 2017, shows the evolving state of pension plans across many states. Their key finding is that the spread between the best-funded and more poorly-funded plans has grown dramatically in recent years – as evidenced by the table at right.

From a write-up in Route Fifty:

The report notes that much of the divergence between the different groups of plans has occurred since the financial crisis that unfolded in 2008 and that “the worst-funded group has continued to deteriorate while the other two groups have stabilized.”

What’s driving this trend? The researchers look at three possibilities: benefit costs, contributions to the plans, and investment returns.

They find that costs are similar among the three groups. But they also conclude that contributions and investment returns lagged among the worst-funded plans, compared to the healthier pension systems.

The full report is online from the Center for State and Local Government Excellence.

Michael Sanderson

Executive Director Maryland Association of Counties