Tennessee’s Pension System Has the Third Smallest Funding Gap in the Nation

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by Samuel Stebbins

 

In much of the country, public pension funding has been one of the most persistent public policy problems. For years, many state governments have failed to make necessary investments in their retirement system, resulting in funding gaps that increasingly present a looming reckoning for taxpayers.

According to a recent report published by The Pew Charitable Trusts, a public policy think tank, many states are now taking earnest measures to reduce their pension funding gap. These measures include increased contributions, cost reduction strategies, and more sophisticated pension management tools. States have also benefited from once-in-a-generation investment returns following the COVID-19 market crash in March 2020.

Still, based on 2019 data, the most recent year of available comprehensive data, the majority of states have a funding shortfall of 25% or more.

Tennessee has assets to cover over 98% of its $41.8 billion pension liabilities — the smallest relative funding gap of any state in the country. If no further funds were added to Tennessee’s pension system, it could continue to meet its payment obligations for another 18.3 years, a longer period than all but five other states.

In recently filed SEC documents, the Tennessee Department of Treasury, which manages retirement system funding, increased its holdings in tobacco giant Philip Morris while reducing its stakes in General Electric and pharmaceutical company Eli Lilly.

All pension funding data used in this story was compiled by The Pew Charitable Trusts and is for 2019. We also considered public-sector, state-level employment, both in raw numbers and as a share of overall employment, using data from the Bureau of Labor Statistics.

RankStatePension funding ratioPension assets ($, billions)Pension liabilities ($, billions)State government employees
1Wisconsin103.0%112.1108.989,800
2South Dakota100.1%12.512.517,300
3Tennessee98.2%41.141.895,500
4Washington96.3%100.9104.8142,700
5New York96.1%215.2223.9254,600
6Idaho94.6%17.718.830,100
7Nebraska93.1%15.216.342,500
8Utah91.7%35.238.481,200
9North Carolina88.4%101.4114.6196,100
10Iowa85.4%34.840.767,100
11Maine84.3%15.117.924,600
12Delaware83.4%10.212.232,200
13West Virginia83.4%15.919.146,900
14Minnesota82.2%70.886.198,900
15Oklahoma80.7%33.241.179,700
16Oregon80.2%70.287.541,300
17Arkansas80.0%28.635.776,200
18Ohio80.0%168.4210.5168,000
19Georgia78.7%95.6121.6162,500
20Florida78.2%163.9209.5246,400
21Missouri77.8%59.977.0100,200
22Virginia77.2%79.8103.3157,300
23Nevada76.5%44.357.940,200
24Wyoming76.5%9.011.813,600
25Montana72.5%11.916.427,400
26California71.9%474.3659.4521,600
27Maryland71.6%54.375.8108,100
28Kansas69.9%20.629.550,700
29North Dakota69.8%5.98.421,400
30Alabama69.4%38.555.5117,000
31Texas69.0%186.8270.7426,400
32Indiana68.6%30.844.9108,900
33Alaska67.4%15.222.622,500
34New Mexico67.3%29.243.453,700
35Louisiana66.9%36.854.986,800
36Colorado66.5%51.877.9126,600
37New Hampshire65.5%9.214.122,400
38Arizona65.2%49.976.689,800
39Vermont63.7%4.57.117,800
40Mississippi61.7%28.646.457,400
41Michigan61.1%65.0106.4178,800
42Massachusetts59.4%58.398.1122,600
43Pennsylvania58.0%89.8154.8148,600
44South Carolina55.4%32.358.3103,500
45Hawaii54.9%17.231.467,000
46Rhode Island54.5%6.612.120,400
47Kentucky44.6%24.053.790,800
48Connecticut44.4%32.072.171,000
49New Jersey39.7%82.3207.1138,700
50Illinois38.9%92.6237.9147,000

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Samuel Stebbins is a contributor to The Center Square.
Photo “Tennessee Capitol” by Adam Jones CC BY-SA 2.0.

 

 

 

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2 Thoughts to “Tennessee’s Pension System Has the Third Smallest Funding Gap in the Nation”

  1. Horatio Bunce

    What’s a pension?

    Signed, Not A Government Employee

    1. 83ragtop50

      Horatio, It is not bad enough that so many of these “workers” are slackards on the job but they get rewarded for it for life. I once made the mistake of hiring an “experienced” software developer who was a state employee. He worked for six months and never produced a piece of usable software. After 3 warnings and bending over to accommodate him I finally showed him the door. I should have done it sooner.

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