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State Pension Fact Sheets

State Pension Fact Sheets

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Published by jmicek

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Published by: jmicek on Oct 04, 2012
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Retiree Health CarePensions
seriousconcernsneedsimprovementsolidperformer Although Alabama consistently paidits full annual pension contributionfrom 2005 to 2010, its pensionsystem was 70 percent funded infiscal year 2010 and faced a $13billion funding gap. Most expertsagree that a fiscally sustainablesystem should be at least 80percent funded. The state also had a$15 billion bill for retiree health carecosts, only 5 percent of which wasfunded, below the 8 percent nationalaverage in 2010.In 2011, Alabama lawmakersincreased contributions from currentand future employees. The governorapproved a package of reformspassed by the House and the Senatethis year, which will raise theretirement age from 60 to 62 anddecrease final averagecompensation for most newemployees.
ALABAMA
TOTAL BILL COMING DUEANNUAL RECOMMENDED CONTRIBUTIONHOW DID THIS STATE FARE?
Full Recommended ContributionFull Recommended Contribution Actual Actual
Retiree Health CarePensions
Total LiabilityTotal Liability
Retiree Health Care
Percent Funded
$15.7B
Pensions
Percent Funded
$42.9B
$1.2B$1.2B$1.2B$465M
 Alabama’s retirement plans had a liability of $58.7 billion and thestate has fallen $28 billion short in setting aside money to pay for it.In 2010, Alabama paid 100 percent of the recommended contribution to itspension plans and just 39 percent of what the state should have paid to fundretiree health benefits. Alabama’s management of its long-term liabilities for pensions was causefor
serious concern
and the state
needed to improve
how it managedits bill for retiree health care.
5%70%
The Widening Gap Update
The grades for pensions and retiree health benets assess how well the states have managed these liabilities. The pension grade is based on being above80 percent funded (2 points), having an unfunded liability that is less than the payroll for active members (1 point), and paying at least 90 percent of therecommended pension contribution over the last ve years (1 point). Plans that got all four points were solid performers, plans with two or three neededimprovement, and plans with one or no points were cause for serious concern. Grades for retiree health benets were based on whether the state’s benetshad a funding level above the national average (1 point), whether 90 percent of the recommended contribution was made in the most recent year (1 point),and whether the state’s plans were better funded based on the most recent data than they were in the prior year (1 point). States with two or three pointswere solid performers, those with just one point needed improvement, and states with no points were cause for serious concern. This fact sheet stems froma 50-state analysis of states’ retiree benet obligations by the Pew Center on the States. The full report and 50 state fact sheets can be found at
www.pewstates.org
.
 
Retiree Health CarePensions
seriousconcernsneedsimprovementsolidperformer Alaska paid, or exceeded, its fullannual pension contribution twicefrom 2005 to 2010. The system was60 percent funded in fiscal year2010 and faced a $7 billion fundinggap. Most experts agree that afiscally sustainable system shouldbe at least 80 percent funded. Thestate also had a $6 billion bill forretiree health care costs, half ofwhich was funded, well above the 8percent national average in 2010.In 2006, Alaska joined Michigan asthe only states requiring newly hiredemployees to join a 401(k)-style,defined contribution retirement plan.But Alaska’s funding challengestems from the nearly 59,000members in the old, defined-benefitplan, who far outnumber the nearly12,000 in the new plan. Theunfunded liabilities for thoseworkers and retirees in the oldsystem, coupled with investmentlosses suffered during the recession,have resulted in the funding gapfacing the state.
ALASKA
TOTAL BILL COMING DUEANNUAL RECOMMENDED CONTRIBUTIONHOW DID THIS STATE FARE?
Full Recommended ContributionFull Recommended Contribution Actual Actual
Retiree Health CarePensions
Total LiabilityTotal Liability
Retiree Health Care
Percent Funded
$12.4B
Pensions
Percent Funded
$16.6B
$397M$329M$855M$1.1B
 Alaska’s retirement plans had a liability of $29 billion and the statehas fallen $13 billion short in setting aside money to pay for it.In 2010, Alaska only paid 83 percent of the recommended contribution to itspension plans and just 77 percent of what the state should have paid to fundretiree health benefits. Alaska’s management of its long-term liabilities for pensions was cause for
serious concern
but the state was a
solid performer
in managing itsretire health care bill.
50%60%
The Widening Gap Update
The grades for pensions and retiree health benets assess how well the states have managed these liabilities. The pension grade is based on being above80 percent funded (2 points), having an unfunded liability that is less than the payroll for active members (1 point), and paying at least 90 percent of therecommended pension contribution over the last ve years (1 point). Plans that got all four points were solid performers, plans with two or three neededimprovement, and plans with one or no points were cause for serious concern. Grades for retiree health benets were based on whether the state’s benetshad a funding level above the national average (1 point), whether 90 percent of the recommended contribution was made in the most recent year (1 point),and whether the state’s plans were better funded based on the most recent data than they were in the prior year (1 point). States with two or three pointswere solid performers, those with just one point needed improvement, and states with no points were cause for serious concern. This fact sheet stems froma 50-state analysis of states’ retiree benet obligations by the Pew Center on the States. The full report and 50 state fact sheets can be found at
www.pewstates.org
.
 
Retiree Health CarePensions
seriousconcernsneedsimprovementsolidperformer Although Arizona consistently paid,or exceeded, its full annual pensioncontribution from 2005 to 2010, thesystem was 75 percent funded infiscal year 2010 and faced a $12billion funding gap. Most expertsagree that a fiscally sustainablesystem should be at least 80percent funded. The state also had a$713 million bill for retiree healthcare costs, 69 percent of which wasfunded, well above the 8 percentnational average in 2010. Arizona lawmakers approvedpension cuts in 2010 and 2011,including raising employeecontributions, lowering statecontributions, and limitingcost-of-living increases. But adistrict court judge said in 2012 thatthe higher contributions wereunconstitutional, leaving their statusin doubt.
ARIZONA
TOTAL BILL COMING DUEANNUAL RECOMMENDED CONTRIBUTIONHOW DID THIS STATE FARE?
Full Recommended ContributionFull Recommended Contribution Actual Actual
Retiree Health CarePensions
Total LiabilityTotal Liability
Retiree Health Care
Percent Funded
$2.3B
Pensions
Percent Funded
$46.5B
$1.11B$1.12B$121M$121M
 Arizona’s retirement plans had a liability of $48.8 billion and thestate has fallen $12 billion short in setting aside money to pay for it.In 2010, Arizona paid 101 percent of the recommended contribution to itspension plans and 100 percent of what the state should have paid to fundretiree health benefits. Arizona’s management of its long-term liabilities for pensions was causefor
serious concern
but the state was a
solid performer
in managingits retire health care bill.
69%75%
The Widening Gap Update
The grades for pensions and retiree health benets assess how well the states have managed these liabilities. The pension grade is based on being above80 percent funded (2 points), having an unfunded liability that is less than the payroll for active members (1 point), and paying at least 90 percent of therecommended pension contribution over the last ve years (1 point). Plans that got all four points were solid performers, plans with two or three neededimprovement, and plans with one or no points were cause for serious concern. Grades for retiree health benets were based on whether the state’s benetshad a funding level above the national average (1 point), whether 90 percent of the recommended contribution was made in the most recent year (1 point),and whether the state’s plans were better funded based on the most recent data than they were in the prior year (1 point). States with two or three pointswere solid performers, those with just one point needed improvement, and states with no points were cause for serious concern. This fact sheet stems froma 50-state analysis of states’ retiree benet obligations by the Pew Center on the States. The full report and 50 state fact sheets can be found at
www.pewstates.org
.

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