States Are Struggling to Fund Pensions—Here’s Why

At $1.24 trillion, the 50-state pension funding gap—the difference between a state retirement system’s assets and its liabilities—improved slightly in 2018 primarily due to strong investment performance.

The funding gap between state pension system assets and benefits promised to workers reached $1.4 trillion in 2016. Underfunded public pension systems have become a significant fiscal challenge facing states and municipalities. Although some plans for public workers are well-funded, others failed to set aside enough money to fund the pension promises made to public employees and took on risks that they weren’t able to manage.