State Pension Assets Grew in 2011, But Large Gaps Remain

New census data shows how pension systems fared in 2011. View aggregate totals for each state.
by | August 10, 2012 AT 2:00 AM

A Census Bureau report released today shows U.S. state pension systems grew collectively by $325 billion last year, enough for a 14.6 percent jump from 2010.

Aggregate totals for pension systems showed increases in assets in all but two states, driven primarily by a boost in investment earnings. These gains, though, still aren’t nearly enough to make a sizable dent in many states’ pension shortfalls.

A recent Pew study reported state pension systems were $1.38 trillion short in fiscal year 2010. State Budget Solutions, which advocates for budget and pension reform, reported in July the gap was even larger. Using different accounting calculations similar to private sector pensions, the group to pegged the national unfunded liability at $4.6 trillion, with the average state public pension 41 percent funded.

Fund assets remain far below necessary levels after suffering huge losses on investments when the stock market collapsed starting in 2008, said State Budget Solutions Editor Frank Keegan. “Public pension funds just keep falling further and further behind,” he said. “[Officials] have to do something about it.”

State retirement systems posted the largest gains from investment earnings last year, totaling $410.6 billion, up from $291.1 billion in 2010. More recent quarterly census figures, though, signal much smaller returns. Wilshire Associates, a California-based investment management firm, reported public pension investments managed just a 1.15 percent annual return for the year ending June 30.

The Census Bureau’s 2011 data also reported foreign and international securities jumped 24.1 percent. Changes in employee contributions varied greatly, with an aggregate increase of 3 percent for the year.

Retirement systems reported total pension obligations swelled 3.7 percent to $3.4 trillion for the year.

The census figures reflect combined totals for 222 state defined-benefit retirement systems.

State Budget Solutions estimated in a July study that the average public pension was about 75 percent funded in 2011. This figure is likely high, the report argues, because public pensions generally follow far less stringent accounting rules than that of private sector pensions.

“They’re using old mortality tables and assumptions that people are going to work longer than the employees are actually working,” Keegan said.

Along with the national figures, the Census Bureau released aggregate data totaling multiple systems for each state. Pension funds in Oklahoma (23.5 percent), Maine (22.3 percent) and Nebraska (21.7 percent) recorded the largest year-over-year increases in total holdings.

Some states, particularly those enacting reforms in recent years, reported significant hikes in employee contribution totals. Utah state employee contributions skyrocketed 67.3 percent, while Florida contributions were up 40 percent for the year.

Governing will soon post more detailed figures from each state pension system surveyed.

2011 Aggregate Data

The following map shows aggregate totals for 222 state defined-benefit retirement systems, with states recording the largest annual increase in total holdings shaded in dark blue. Click a state to view detailed figures.

NOTE: Systems in Alabama, Michigan and Texas have exceptions to the fiscal year rule, which extends beyond the June 30 cutoff. Please zoom out to view Alaska and Hawaii data.