This article comes from the Pew Research Center
Since The Pew Charitable Trusts first evaluated the fiscal health of states’ public sector pension systems in 2007, these retirement plans have varied widely, both across states and year over year, in their ability to cover the costs of promised benefits with the assets they had on hand. But in 2020, pension systems, collectively, met a crucial benchmark for minimum plan funding for the first time since 2001. As a result, states are now positioned to sustainably fund their pension promises for the long run—if they make smart policy choices to seize this opportunity.
The stabilization of state pension funding levels reached in 2020 was largely driven by an increase in employer and employee contributions. This growth has helped plans correct for past underfunding: Since 2007, states have more than doubled their annual contributions, which improved the stability of pension funding but also stressed state budgets, leaving less money available to spend on other priorities.