If these benefits aren’t sustainably funded, the cost of paying for them could hinder states’ ability to fund core government services such as schools, public safety, and infrastructure.
Policymakers need better information—including successful models—to help develop financially sound retirement systems that protect taxpayers, maintain the government’s ability to deliver important public services, and put state and local workers on the path to a secure retirement.
But there’s no one-size-fits-all solution. Every city and state has a unique set of policy preferences and budgetary challenges, and will choose its own approach. Pew provides the nonpartisan, evidence-based data and analysis that policymakers need to ensure that public sector retirement systems are financially sound for current and future workers, retirees, and taxpayers.
State and local retirement systems aim to balance multiple goals: providing plans that support government workforce objectives and ensuring that the cost of benefits is stable and sustainable over the long term, all while putting workers on a pathway to retirement security.
Public retirement systems aim to balance providing plans that support government workforce objectives and ensuring that the cost of benefits is stable and sustainable over the long term, all while putting workers on a pathway to retirement security.
For 20 years, the state pension systems in South Dakota, Tennessee, and Wisconsin have achieved high funding rates and predictable costs. But they came to their success for different reasons, using a range of plan designs and pursuing various priorities.
Effective management of state pension investments is crucial to ensuring the sustainability of retirement benefits for millions of public sector employees, so The Pew Charitable Trusts has tracked state pension investment practices and outcomes since 2012. This chartbook is the latest installment of that work and offers a detailed analysis of recent investment trends, focusing on asset allocation, investment performance, and management fees for 73 major public pension plans in fiscal years 2021 and 2022.
Several state legislatures took steps in 2024 to enhance funding for public pension systems by adopting strategies to increase annual employer contributions to their retirement systems, manage how unfunded liabilities are paid down, and take advantage of surplus revenues to make supplemental payments to improve system funding and further pay down debt.