State of the State Pensions
States underestimate public sector pension liabilities
State officials know that public sector pensions are underfunded. But the picture is even gloomier than they report.
Mouse over states to see unfunded pension liabilities per capita; total unfunded pension liabilities are displayed in parentheses.
State actuaries underestimate how much they owe on public employee pension plans. When properly projecting state pension plans, total liabilities equal $5.2 trillion, $3.0 trillion of which is unfunded. This unfunded portion is $2.5 trillion greater than the states report.
The first map shows states’ unfunded pension liabilities as states report them. The second map shows the size of unfunded liabilities when using standard financial practice to calculate them.
For more information, see "The Crisis in Public Sector Pension Plans," by Eileen Norcross.
Source: Novy-Marx, Robert, and Joshua D. Rauh. 2009. "The Liabilities and Risks of State-Sponsored Pension Plans." Journal of Economic Perspectives, 23(4): 191–210.
Data is for 2008. All figures in 2008 dollars
Eileen Norcross is a senior research fellow with the Social Change Project and the lead researcher on the State and Local Policy Project. Tate Watkins, a research associate with the State and Local Policy and Technology Policy programs, contributed to this project.