As a stakeholder in a public sector retirement system, you’ve watched over the past decade as states have struggled with their pension fund management and policies. Some states were able to recover from the Great Recession, but most were not. And while there has been some improvement over the past fiscal years, on average statewide plans have only been able to get back to where they were right before the COVID-19 Recession.

So what can you do about this? Below, you’ll find solutions for:


If history is a guide, states are likely going to raise your contribution rates into the pension system. This won’t increase the value of your benefit, but it might help in the long-run in making sure there are dollars available to pay your retirement check. However, your state shouldn’t try to push all of the growing costs of pension benefits onto your shoulders. If you want to become an advocate for yourself, the first step is understanding exactly how your benefit is supposed to work, and where it might have gone off the rails: 

Ultimately, you should advocate to be a part of a comprehensive, multilateral stakeholder process that clearly defines the source of unfunded liabilities for your pension plan, details a plan to prevent that from happening again, and adopts a path to cleaning up the legacy pension debt over time.  

Local Employers

Your voices need to be heard. Again, and again. In most states, local employers have very little control over their pension contribution rates, because they don’t control investments, investment assumptions, or amortization policies. This is especially true if you are a local official participating in a cost-sharing pension plan. (If you are a local official where your city, county, or agency has its own funded ratio, then in good times you can try to pay more than the required contribution rate, or set up a special fund to save money to help pay pension contributions when tax revenues are low. Unfortunately, now is a time that revenues are low.) So here are a few things you can do:

  1. Document anything that you have to cut or reduce because you are making your pension contribution, which likely includes money toward unfunded liabilities. State officials need to understand the human costs of having not dealt with unfunded liabilities.
  2. Call out state officials if they are pushing unfunded liability cost increases down to you. This might not change anything immediately, but if the legislature keeps hearing the same message year after year eventually there will be an opportunity to address this problem. 
  3. Ask your retirement system to lay out exactly what the costs in the long-term would be for underpaying your required contribution rate at different levels would be. It might be a lot harder to pay the long-term costs from only paying half of your required contributions than just taking a one-time 20% holiday on pension contributions. 

Labor Leaders

We understand that public sector labor has been under attack for some time. State legislatures have sought to reduce the power of labor unions through right-to-work laws and restrictions on collective bargaining. As a bipartisan organization, we don’t take sides on these policies, but we do respect the threat that they have created. However, the call to recognize a systemic weakness in public sector retirement plans is not inherently the same kind of assault on workers’ rights. It is a call to defend public sector employees from financial threats in the near-term and long-term.

The political strategy of either ignoring the problem with underfunded pension plans or demanding that governments simply pay up for whatever the required contribution rate is might have made sense a decade ago. It wasn’t immediately obvious that pension plan funded levels weren’t going to bounce back. But that strategy has contributed to a political apathy from legislatures towards the unfunded liabilities carried by pension plans. 

As these unfunded liabilities continue to grow unchecked, pension plans become more vulnerable to bad-faith attacks to undermine their sustainability with the goal of eliminating pensions for future generations. The harder it becomes to bring existing pension plans back to a resilient funded position, the easier it is to make the case that pension plans should be replaced with less secure retirement options. A new approach is needed to ensure retirement security for public workers

Labor leaders at the AFT, UFT, NEA, AFL-CIO, AFSCME, IAFF, FOP, and the many others who advocate for public employees should adopt a new strategy that includes the following:

  1. Arguing that unfunded liabilities are growing, and for reasons other than just the failure of states to always pay required contributions. Even as states improved their funding commitments over the past decade, unfunded liabilities increased. Actuarial assumptions need to be more conservative, even if this means additional near-term costs.
  2. Arguing that the apathy of legislative leaders towards unfunded liabilities can not be used as an excuse to under-compensate employees. Pension costs are growing, and eating into the budgets that are otherwise used to pay salaries. Legislators need to take these costs seriously and act to reverse them so that the budgetary pressures on government employers are not exacerbated by pension costs. 

In most states with large unfunded liabilities as a percentage of the state’s economy and budget, it is likely that tax increases will be necessary to deal with legacy unfunded liabilities. A plan to solve for unfunded pension liabilities could very reasonably include revenue increases too.