A new Pew Center on the States report finds that state pension systems have a combined $1 trillion unfunded liability. According to the analysis, state pension funds had set aside $2.35 trillion to pay for an estimated $3.25 trillion in liabilities over the next 30 years. The $1 trillion public pension deficit amounts to more than $8,800 per U.S. household.
The gap is actually probably even worse, for, as the preface to the report notes, "Because most states assess their retirement plans on June 30, our calculation does not fully reflect severe investment declines in pension funds in the second half of 2008 before the modest recovery in 2009." Moreover, while the recession has contributed to public pension funding woes, it is not the principal cause of the underfunding:
While recent investment losses can account for a portion of the growing funding gap, many states fell behind on their payments to cover the cost of promised benefits even before the Great Recession. Our analysis found that many states shortchanged their pension plans in both good times and bad, and only a handful have set aside any meaningful funding for retiree health care and other non-pension benefits.
