However, deficit still totals more than $900 billion
The funding shortfall for state retirement systems totaled $934 billion in 2014, down $35 billion from 2013, said a brief released Wednesday by The Pew Charitable Trusts.
Data for 238 public-sector pension funds was examined; 2014 is the most recent year for which complete data are available.
The overall funding increase was primarily driven by strong investment returns for the year with plans returning 17% on average, Pew researchers said.
Among the 50 states, South Dakota, Oregon, Wisconsin, Tennessee and North Carolina posted the highest funding ratios at 107%, 104% 103%, 99% and 99%, respectively. Illinois, Kentucky, New Jersey, Connecticut and Alaska reported the lowest funding ratios at 41%, 41%, 42%, 51% and 60%, respectively.
While most states saw their funding ratios increase, Pew researchers noted that “pension debt remains large” and few states are contributing enough to their plans to reduce unfunded liabilities.
Preliminary data for 2015 show plans' aggregate deficit rising to more than $1 trillion on the back of weak investment returns (3% to 4% on average). Investment performance has been even weaker in 2016, the brief noted.
“Many states face significant challenges in meeting their pension promises to workers,” said Greg Mennis, director of Pew's public-sector retirement systems project, in a news release. “The volatility and low investment returns are a reminder that policymakers cannot count on investment returns to close the pension funding gap.”