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.
Minnesota is better positioned than most states to meet its public employee pension obligations. The state has $70.8 billion in assets against $86.1 billion in obligations — an 82.2% funding ratio. At current levels, without any additional investments, Minnesota’s public retirement system could meet its obligations for nearly another 14 years.
Public employee pension plans that are either partially or entirely under the state’s purview include the State Employees Retirement Fund, Correctional Employees Retirement Fund, and the Legislators Retirement Fund.
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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