America's $1.4 trillion pension problem
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Understanding funded status in public pension plans
Today, America faces a $1.4 trillion funded status shortfall.
Pensions are still being paid to retirees. But with a $1.4 trillion shortfall, pension plans nationwide lack those assets — and their investment returns — which then pay future benefits. It’s like being short on ingredients to make more retirement pies.
How did this happen?
Pension plans are playing catch up – and it’s impacting you.
In 2001, the average public employee contributed 5.2% of their income to their pension plan. Today, that average is up to 6.3%.6 This increase takes a bigger bite out of pay, and makes any raise feel less meaningful.
Who else feels the funded status challenge?
Some plans are reducing or eliminating cost-of-living adjustments. Most pension funds continue to pay out full benefits to current retirees, but retirement security will slowly erode with inflation making things more expensive to buy.
As pension debt rises, some states and cities have had to raise property and sales taxes. Whether you’re working or retired, this means less money for everyday living.
Society at large
Funding for roads, schools, parks and environmental programs, public housing and other municipal services are being cut as pension debt takes a bigger bite from public budgets.
Learn more about funded status challenges nationwide
In 2017, pension costs accounted for 4.7% of state and local government spending — up 104% since 2002.7 While these challenges and others are large, you can do something about it — and it starts by learning more.
Let's fix this together.
Solving the challenges of funded status nationwide will take active, engaged voices calling for change.
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Equable is committed to helping you learn more about the challenges facing pensions today.
Connect with us
At Equable, we’re working with employees, employers, policy makers and others to address the funded status challenge and create real retirement plan sustainability and affordability.
1As reported by state-administrated pension plans using their accounting methods. Including the largest city and county managed pension plans increases the total current shortfall to around $1.6 trillion.
2Equable Institute analysis of public pension plan financial reports and data from the Public Plans Database
3Equable Institute analysis of public pension plan financial reports and data from the Public Plans Database
6Equable Institute analysis of public pension plan financial reports and data from the Public Plans Database