Tennessee ranks as one of the top states in the nation in terms of how it funds its pension systems, according to a report that the Arlington, Virginia-based American Legislative Exchange Council (ALEC) released this week.
ALEC officials titled their report Unaccountable and Unaffordable, 2020. This annual report collects and analyzes each state’s unfunded public pension liabilities. The report finds state governments’ unfunded liabilities total $5.82 trillion nationwide – an average of $17,748 per person.
“This comparative analysis of state pension systems is a valuable tool for state legislators as they strive to keep promises made to retired public employees while also protecting taxpayers through responsible pension reforms,” according to an ALEC press release.
ALEC CEO Lisa B. Nelson said in the press release that unfunded pension liabilities are a looming threat to states’ financial health.
The ALEC press release quoted Tennessee State Rep. Susan Lynn (R-Mount Juliet).
“In Tennessee, we have worked hard to maintain one of the nation’s best funded pension systems,” Lynn said.
“Our efforts on behalf of taxpayers will continue, and we are proud to be recognized in the latest edition of ALEC’s report for our commitment to sound pension policies.”
According to the report, the 10 states with the largest unfunded liabilities, California, Illinois, Texas, Ohio, New York New Jersey, Pennsylvania, Florida, Georgia, and Massachusetts, have rapidly growing unfunded liabilities.
“They take up an increasing share of total unfunded liabilities in the country. These states make up 58 percent of all unfunded liabilities in the country, up from 57 percent last year,” the report said.
“Pension investment returns have again fallen short of assumptions in this year’s report, covering FY 2019, with an average of 6.5 percent return instead of the assumed 7.2 percent.”
ALEC Chief Economist and Executive Vice President of Policy Jonathan Williams said in the press release that unfunded public pension liabilities represent a massive risk for state taxpayers, as well as state workers and retirees.
“Fortunately, states like Wisconsin, Michigan, Tennessee and Oklahoma have all enacted pension reforms in recent years that will ensure promises to workers and retirees are honored, provide flexibility for young workers and protect hardworking taxpayers,” Williams said.
ALEC is the largest nonpartisan, voluntary membership organization of state legislators in the United States.
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