5. Oklahoma
> Pension Liability: $35 billion
> Percent of Pensions Funded: 57% (3rd lowest)
> 2009 Actuarially Recommended Contribution: $1 billion
> 2009 Actual Contribution: 77% (11th lowest)
Oklahoma has the country’s third most underfunded public pension account. Only 57% of those benefits which have been promised to public employees are funded. The House of Representatives is currently considering a bill which would ra
ise the age of state employees, hired after November 1st, at which they are eligible to start receiving pension benefits. The age of eligibility for the majority of state employees would change from 60 to 65, and it would change from 62 to 65 for teachers.
4. New Jersey
> Pension Liability: $135 billion
> Percent of Pensions Funded: 66% (12th lowest)
> 2009 Actuarially Recommended Contribution: $4 billion
> 2009 Actual Contribution: 36% (2nd lowest)
New Jersey’s pension fund is already extremely underfunded, with just 66% of the necessary money contributed. To make matters worse, in 2009 the state only funded 36% of the amount of money recommended by state actuaries to keep long-term benefit promises. This is a huge change for the state, which as recently as 2002 had fully funded pension plans.
3. New Hampshire
> Pension Liability: $8 billion
> Percent of Pensions Funded: 58% (4th lowest)
> 2009 Actuarially Recommended Contribution: $263 million
> 2009 Actual Contribution: 75% (10th lowest)
New Hampshire is tied with Kentucky for having the fourth-lowest percentage of its pensions funded, just 58%. It also only paid 75% of its recommended contribution for 2009, the tenth-lowest percentage among the states that year. The New Hampshire Senate is currently considering a House-passed pension reform bill which will make newer employees contribute more money and work longer to get their pensions. Public employees will also face new caps on the amount they can receive.
2. Illinois
> Pension Liability: $126 billion
> Percent of Pensions Funded: 51% (lowest)
> 2009 Actuarially Recommended Contribution: $4 billion
> 2009 Actual Contribution: 71% (8th lowest)
Illinois has the emptiest pension fund compared to the other states, with only 51% of promised benefits currently funded. This is down from 54% the year before. Most experts, including the US Government Accountability Office, recommend that states have at least 80% of their future pension costs accounted for. The state also contributed the eighth-lowest percentage of its recommended contribution for 2009 — 71%. So far, the state has sold $7.16 billion in bonds to help cover its 2010 and 2011 pension payments.
1. Kentucky
> Pension Liability: $36 billion
> Percent of Pensions Funded: 58% (4th lowest)
> 2009 Actuarially Recommended Contribution: $965 million
> 2009 Actual Contribution: 58% (3rd lowest)
The state of Kentucky’s extremely underfunded pension account, coupled with its recent poor contributions to that account, place it as the worst-off state for pension funding. Kentucky only has 58% of its pension costs funded, the fourth-lowest percentage in the country. In 2009, the state contributed 58% of what was recommended for the fund by state actuaries, the third-lowest percentage in the country. Furthermore, Kentucky, which is one of the few state’s with 2010 pension data, paid only 54% of its pension liabilities last year. Two financial rating agencies, Moody’s and Fitch, recently downgraded the state’s bond rating due to its underfunded pension system.
Douglas A. McIntyre & Charles B. Stockdale
