Pension Risk Reporting Among States: An Update
States continue to implement, improve critical risk assessment tools
Public pension risk reports provide a quantitative assessment of the potential effects of investment risk and economic uncertainty on plan balance sheets and the costs required to predictably and sustainably fund retirement system obligations. They are a critical tool for plan fiduciaries, governmental sponsors, and other pension stakeholders to help evaluate the fiscal health of state pension plans, and more than half of states throughout the country use them.
Now three states—Maryland, Vermont, and New Mexico—have become the latest to begin publishing such reports. The reports recently produced in these states align with The Pew Charitable Trusts’ minimum standard for routine and transparent reporting that can help policymakers evaluate potential risks and plan for uncertainty. With the implementation and improvement of pension risk reporting practices in these three states, retirement systems in 28 states now produce such assessments on an ongoing basis.
This underscores the real progress made in this area. In 2012, just seven states were using this important tool; by 2022, as identified in Pew’s comprehensive review of state risk reporting practices, 25 states had implemented stress tests and other assessments to evaluate the potential impacts of economic volatility on public sector retirement systems. In addition, the reports recently published by Maryland, Vermont, and New Mexico show how policymakers are tailoring assessments to reflect the circumstances and considerations unique to each state, ensuring that analyses provide useful information to plan sponsors and budgetary decision-makers.
What is pension risk reporting?
Under Pew’s minimum standard, qualifying assessments consist of quantitative, forward-looking analyses of investment risk on plan funding levels and required contributions.
Assessments must also be produced on a routine basis and transparent, meaning that they are published in an easily identifiable and publicly accessible manner.
Maryland begins publishing stress tests in annual valuation reports
In October 2024, the Maryland State Retirement and Pension System (SRPS) produced a stress test analyzing funding levels and expected costs under a range of economic scenarios. SRPS has since included updated investment risk analyses in the plan’s 2025 actuarial valuation report. These analyses were published following recommendations and risk assessments from Pew’s state fiscal policy project.
The 2024 stress test demonstrates a comprehensive approach to assessing the effects of investment performance, with results presented in the context of state pension funding goals, to help policymakers better understand the relevant risks facing the system. Including this analysis in annual actuarial reporting ensures that policymakers, plan officials, and stakeholders are able to access this important information, and allows them to monitor trends and developments in the risks that economic volatility can pose to plan funding and employer costs.
Vermont builds on 2019 risk assessments to inform policymaking
In May 2025, the trustees of the Vermont retirement systems published reports assessing the effects of investment risk on the pensions of state employees, teachers, and municipal employees. The reports update a 2019 risk assessment for the systems, and state officials have confirmed their plans to continue assessments in future years—demonstrating a commitment to routine and transparent pension risk reporting as an ongoing practice.
Notably, the updated assessments include analysis of relevant risks for the state employees and teachers plans—specifically, the potential for the state’s current funding policy to result in increases in required contributions in the event of an investment loss. The analysis also evaluates proposed approaches for more flexible pension funding policies, which will support state policymakers in making informed decisions to ensure pension costs remain sustainable and predictable over the long term.
New Mexico publishes risk assessment for public employees’ system
Since 2020, when New Mexico adopted new risk-sharing design features, the state’s Public Employees Retirement Association (PERA) has routinely produced assessments largely aligned with Pew’s benchmark. These assessments evaluate the effects of investment risk on the plan’s funding levels and expected cost-of-living adjustments. PERA’s analysis offers an example of how risk analysis can answer important questions about expected outcomes for retirement security and benefit levels, as well as providing insights on long-term fiscal sustainability.
These assessments were previously only included in board meeting materials, but following input from Pew in 2025, PERA began publishing them in a more publicly accessible location alongside the plan’s other actuarial reports. The move provides greater transparency around pension risk reporting—meeting a key element of Pew’s benchmark and ensuring that policymakers and other stakeholders have access to these key analyses.
New reporting shows value of policy-relevant assessments
As states continue to adopt routine and transparent pension risk reporting, it’s critical that these assessments include policy-relevant analyses to help plan sponsors navigate uncertainty and ensure fiscal sustainability. The stress tests and risk assessments that Maryland, Vermont, and New Mexico recently implemented demonstrate how risk reporting can produce analyses tailored to policy questions that are most relevant to each state and plan.
States can—and should—continue to revisit pension risk reporting to address these and other relevant concerns. Shifts in the national economy will prompt routine updates to scenarios and baseline assumptions, while policymakers might also consider expanding assessments to consider other factors, such as the possibility that actual contributions may fall short of plan assumptions, or emerging concerns—including demographic changes affecting plan participants, technological disruptions, or the effects of changing environmental conditions on plan investments. Routinely updating these reporting tools will provide policymakers with the data they need to identify potential risks, plan for an uncertain future, and choose fiscally sustainable paths for funding public sector retirement benefits.
Stephanie Connolly works on The Pew Charitable Trusts’ state fiscal policy project.
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