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The pension has long been a standard part of retirement for many Americans, particularly for public sector employees like police officers and teachers. Offering a pension — a set annual income for long-time employees after they retire — used to help attract quality employees by offering them the promise of financial security in their golden years.
Does the same hold true today? Private companies rarely offer pensions anymore, and states are struggling with pension commitments they made decades ago. The relative security of a pension is tied to the well-being of the government that offers it, and a great many U.S. states currently have unfunded pension liabilities. GOBankingRates analyzed all 50 states in terms of unfunded pension liabilities for 2021 and 2022, as well as unfunded pension liabilities per capita for 2021 and 2022, sourced from American Legislative Exchange Council.
The results are in, with the top 10 states that are well-prepared to continue funding their pension systems, and the bottom 10 that might find themselves in fiscal hot water in the near future. Did your state make the list?
Best States for Pensions
10. Minnesota
2021 Unfunded Liabilities: $148,316,886,233
2022 Unfunded Liabilities: $112,677,522,555
2021 Unfunded Liabilities per Capita: $25,991
2022 Unfunded Liabilities per Capita: $19,742
9. Iowa
2021 Unfunded Liabilities: $69,171,677,447
2022 Unfunded Liabilities: $53,942,069,863
2021 Unfunded Liabilities per Capita: $21,681
2022 Unfunded Liabilities per Capita: $16,893
8. Indiana
2021 Unfunded Liabilities: $69,135,444,681
2022 Unfunded Liabilities: $54,732,139,147
2021 Unfunded Liabilities per Capita: $10,189
2022 Unfunded Liabilities per Capita: $8,042
7. Florida
2021 Unfunded Liabilities: $302,873,520,482
2022 Unfunded Liabilities: $234,011,651,429
2021 Unfunded Liabilities per Capita: $14,062
2022 Unfunded Liabilities per Capita: $11,236
6. North Carolina
2021 Unfunded Liabilities: $174,143,444,573
2022 Unfunded Liabilities: $132,283,080,396
2021 Unfunded Liabilities per Capita: $16,681
2022 Unfunded Liabilities per Capita: $12,537
5. Utah
2021 Unfunded Liabilities: $55,458,770,068
2022 Unfunded Liabilities: $44,620,043,795
2021 Unfunded Liabilities per Capita: $16,951
2022 Unfunded Liabilities per Capita: $13,367
4. Oklahoma
2021 Unfunded Liabilities: $80,636,914,666
2022 Unfunded Liabilities: $61,068,329,112
2021 Unfunded Liabilities per Capita: $20,366
2022 Unfunded Liabilities per Capita: $15,318
3. New York
2021 Unfunded Liabilities: $508,708,887,680
2022 Unfunded Liabilities: $368,166,261,391
2021 Unfunded Liabilities per Capita: $25,182
2022 Unfunded Liabilities per Capita: $18,561
2. Washington
2021 Unfunded Liabilities: $1657,432,460,443
2022 Unfunded Liabilities: $125,178,721,352
2021 Unfunded Liabilities per Capita: $21,730
2022 Unfunded Liabilities per Capita: $16,103
1. Idaho
2021 Unfunded Liabilities: $29,276,256,967
2022 Unfunded Liabilities: $20,664,561,618
2021 Unfunded Liabilities per Capita: $15,919
2022 Unfunded Liabilities per Capita: $11,236
Worst States for Pensions
10. Connecticut
2021 Unfunded Liabilities: $145,779,590,837
2022 Unfunded Liabilities: $125,178,721,352
2021 Unfunded Liabilities per Capita: $40,428
2022 Unfunded Liabilities per Capita: $34,718
9. New Mexico
2021 Unfunded Liabilities: $76,211,334,592
2022 Unfunded Liabilities: $67,502,035,646
2021 Unfunded Liabilities per Capita: $35,991
2022 Unfunded Liabilities per Capita: $31,903
8. New Jersey
2021 Unfunded Liabilities: $370,157,297,823
2022 Unfunded Liabilities: $321,059,516,097
2021 Unfunded Liabilities per Capita: $39,849
2022 Unfunded Liabilities per Capita: $34,645
7. Massachusetts
2021 Unfunded Liabilities: $191,086,201,505
2022 Unfunded Liabilities: $175,167,312,917
2021 Unfunded Liabilities per Capita: $27,182
2022 Unfunded Liabilities per Capita: $25,079
6. Illinois
2021 Unfunded Liabilities: $533,727,891,857
2022 Unfunded Liabilities: $467,902,338,216
2021 Unfunded Liabilities per Capita: $41,657
2022 Unfunded Liabilities per Capita: $36,926
5. Alabama
2021 Unfunded Liabilities: $92,734,851,779
2022 Unfunded Liabilities: $93,824,726,335
2021 Unfunded Liabilities per Capita: $18,457
2022 Unfunded Liabilities per Capita: $18,616
4. Hawaii
2021 Unfunded Liabilities: $58,122,692,070
2022 Unfunded Liabilities: $53,129,262,556
2021 Unfunded Liabilities per Capita: $39,939
2022 Unfunded Liabilities per Capita: $36,508
3. California
2021 Unfunded Liabilities: $1,530,649,405,907
2022 Unfunded Liabilities: $1,405,052,021,581
2021 Unfunded Liabilities per Capita: $38,713
2022 Unfunded Liabilities per Capita: $35,787
2. Alaska
2021 Unfunded Liabilities: $31,331,382,418
2022 Unfunded Liabilities: $33,761,865,724
2021 Unfunded Liabilities per Capita: $42,829
2022 Unfunded Liabilities per Capita: $46,080
1. Nevada
2021 Unfunded Liabilities: $82,252,281,510
2022 Unfunded Liabilities: $99,000,289,435
2021 Unfunded Liabilities per Capita: $26,494
2022 Unfunded Liabilities per Capita: $31,489
Joel Anderson contributed to the reporting for this article.
Methodology: GOBankingRates analyzed all 50 states in terms of three overarching factors: (1) Unfunded pension liabilities for 2021 and 2022, (2) unfunded pension liabilities per capita for 2021 and 2022, and (3) funding ratio of public pension plans for 2021 and 2022, sourced from American Legislative Exchange Council. States were scored using these three factors and scored for their respective for year-over-year change for each metric. Scores were combined, with unfunded pension liabilities receiving half weight, since larger states naturally have larger liabilities, while all other factors received full weighting. All data was collected and up to date as of Sept. 25, 2023.
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