Snapshots of 10 states with biggest pension gaps
Jun 19, 2012, 7:14 AM
(AP) – Few states have enough money in their retirement systems to cover all the pensions they’re required to pay in coming decades. Economic problems have decreased the value of their investments, and many states have simply failed to contribute their full share to retirement systems.
Experts say retirement systems should have assets to cover at least 80 percent of the money they owe in the long run.
Here’s a look at the 10 states with the lowest funding percentages in 2010, according a new report from the Pew Center on the States:
1. Illinois: Had 45 percent of the $138.8 billion it owes long-term. Consistently failed to make its full pension contribution from 2005 to 2010. Lowered pension benefits for future employees in 2010. Now officials are negotiating a proposal to reduce cost-of-living increases for both current and future employees.
2. Rhode Island: Had 49 percent of the $13.4 billion it owes long-term. Consistently made full pension contributions from 2005 to 2010. Overhauled its pension system last year, creating a new hybrid retirement plan, cutting cost-of-living increases, increasing the retirement age and more.
3. Connecticut: Had 53 percent of the $44.8 billion it owes long-term. Made full pension contribution three times from 2005 to 2010. Cut pension and retiree health benefits in 2011. The governor has proposed a plan to reach 80 percent funding by 2025.
4. Kentucky: Had 54 percent of the $37 billion it owes long-term. Failed to make full pension contribution from 2005 to 2010. Lawmakers raised the retirement age and changed benefit calculations in 2008 and have suspended cost-of-living increases the next two years.
5. Louisiana: Had 56 percent of the $41.4 billion it owes long-term. Failed to make full pension contribution three times from 2005 to 2010. Lawmakers approved benefit cuts for new employees in 2009 and 2010. In 2012, a hybrid pension plan was created for new employees.
6. Oklahoma: Had 56 percent of the $36.4 billion it owes long-term. Failed to consistently make full pension contribution from 2005 to 2010. Increased the retirement age for new employees in 2011 and limited cost-of-living increases for retirees.
7. West Virginia: Had 58 percent of the $15 billion it owes long-term. Failed to make full pension contribution twice from 2005 to 2010. Cut pension benefits in 2011.
8. New Hampshire: Had 59 percent of the $9 billion it owes long-term. Failed to make full pension contribution twice from 2005 to 2010. Cut benefits in 2009 and 2011, including raising the retirement age and increasing contributions from current and new employees. Increased contributions struck down by court.
9. Alaska: Had 60 percent of the $16.6 billion it owes long-term. Made its full pension contribution twice from 2005 to 2010. Created a 401(k)-style pension plan in 2006, but most employees remain in old defined-benefit plan.
Hawaii: Had 61 percent of the $18.5 billion it owes long-term. Paid its full pension contribution every year but one from 2005 to 2010. Increased contributions from taxpayers and employees in 2011 and also trimmed retiree cost-of-living increases.
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