In much of the country, public pension funding has been one of the most persistent public policy problems. For years, many state governments have failed to make necessary investments in their retirement system, resulting in funding gaps that increasingly present a looming reckoning for taxpayers.
According to a recent report published by The Pew Charitable Trusts, a public policy think tank, many states are now taking earnest measures to reduce their pension funding gap. These measures include increased contributions, cost reduction strategies, and more sophisticated pension management tools. States have also benefited from once-in-a-generation investment returns following the COVID-19 market crash in March 2020.
Still, based on 2019 data, the most recent year of available comprehensive data, the majority of states have a funding shortfall of 25% or more.
Louisiana's state pension system has liabilities totalling $54.9 billion. Yet, the state has only $36.8 billion in pension assets, enough to cover only about two-thirds of its obligations to retired state workers.
Due to a market boom in the wake of the COVID-19 crash, Louisiana's pension system will likely be in better shape in coming years. The state's Teachers' Retirement System, by far the largest public pension fund in Louisiana, reported returns of 35.7% in fiscal 2021, surpassing the 27.7% benchmark. Over half of that fund is invested in alternative assets, real estate, and domestic equities.
All pension funding data used in this story was compiled by The Pew Charitable Trusts and is for 2019. We also considered public-sector, state-level employment, both in raw numbers and as a share of overall employment, using data from the Bureau of Labor Statistics.
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