The average pension contribution rate for state and local employers is 31.8% of payroll in 2026. This represents a historic high and is more than triple the 9.3% rate in 2001.
However, only 9.4% of every payroll dollar goes toward normal cost, while 22.4% goes toward paying down accumulated unfunded liabilities.
Equable Insights
All figures as of 2026.
- Average employer contribution rate: 31.8% (21.9% median)
- Average employee contribution rate (enrolled in Social Security): 6.4% (6.2% median)
- Average employee contribution rate (not enrolled in Social Security): 9.7% (10.0% median)
How Do Pension Contributions Work?
Every year, pension fund actuaries calculate normal cost. This is the contribution required, in addition to any investment returns, to pay in advance for the benefits earned by plan members during that year.
Normal cost is first funded by contributions from public employees via paycheck deductions. Contributions from government employers cover the remaining balance of normal cost as well as any amortization (pension debt) payments.
The level of contributions required to pay all benefits and expenses, including an assumed investment return, in a given year is known as the actuarially determined contribution.
Pension Contribution Rates by State 2026
Compare member and employee contribution rates by state in the table below.
What is the Average Employer Contribution Rate?
State and local employers contribute an average 31.8% of payroll to pension plans in 2026. This is up from 31.7% in 2025 and the highest contribution rate since 2001 when the total employer rate was 9.3%.
Employer Contribution Rate Trends
As noted, the amount of contributions from government employers not allocated to normal cost is used to cover pension debt.
The chart below shows how average employer contribution rates have increased over time alongside growing pension funding shortfalls.
Today, most of what employers contribute goes toward paying down pension debt rather than funding new benefits. This wasn’t always the case.
In 2001, nearly 90% of employer contributions funded normal cost. Back then, the employer normal cost rate was 8.4%, and the unfunded liability payment rate was 1.1%.
Over the next 26 years, however, unfunded liability payments rose sharply in most years, while the normal cost rate remained steady. In some years, the normal cost rate rose mildly. In others, it declined year over year.
By 2011, in the aftermath of the Great Recession, employers were contributing more toward unfunded liability payments than normal cost for the first time. Just 46.2% of employer contributions funded normal cost.
Today, 70.4% of employer contributions go toward debt repayments, with 95% of the increase in employer total cost being the result of increases in pension debt cost.
Are States Paying Their Actuarially Required Contributions?
A primary driver of growing pension debt is that governments, in aggregate, don’t always pay their pension bills in a given year.
The yellow line on the chart below illustrates how state commitment to paying required contributions has steadily improved since a post-recession low in 2010. While a few states are still not paying 100% of required contributions, on net the country paid 100% for three years in a row.
In 2025, the actual amount paid among those who have reported data is 99.4% of required contributions — strong, but not quite the 100% target. (This is partially because supplemental payments have come down, no longer covering the few states that continue to pay less than actuarially required.)
For detailed breakouts of the share of state pension contributions going toward normal cost and unfunded liability payments, download the full contribution rate data from our Public Retirement Research Database.
How Does Social Security Affect Pension Contribution Rates?
When it comes to employee contributions, it is important to keep in mind that states and cities do not uniformly participate in Social Security.
Most individual government units do also enroll their employees in Social Security, but a few governments never opted into the federal program. In theory, these non-participating locations should offer larger benefits and might have larger contribution rates.
What is the Average Employee Contribution Rate?
Employees enrolled in Social Security contribute 6.4% of their paycheck to their pension benefits, on average. Employees who are not offered Social Security contribute 8.8%, on average.
As of 2026, average member payroll contributions for public employees enrolled in Social Security were 2.5% greater than for those who are not. This difference has largely remained consistent over the last 26 years and is down only slightly from 2.7% in 2001.
The largest differential was 2.9% in 2011, when enrolled employees contributed 5.2% and nonenrolled employees contributed 8.1%.
Pension Contribution Rates by Plan
In many states, pension contributions change from year to year. The following table displays both employee and employer contribution rates by plan as of the 2026 fiscal year.
Use the search function or navigate through each page to find figures for your plan.
