The funding ratio for state defined benefit pension plans in 2009 fell to an estimated 65%, compared to 85% a year earlier, according to a Wilshire Consulting report.
The ratio of pension assets to liabilities for the 125 state pension plans Wilshire examined is at the lowest level since Wilshire began the report in 1990, Steven Foresti, Wilshire managing director, said in an interview.
But Mr. Foresti noted that most of the plans' funding data was as of June 30; global equity markets have since rallied 19% as measured by the MSCI ACWI in the eight months through Feb. 23, which would result in higher funding ratios today. Taking that rally into account, Mr. Foresti estimated that as of Jan. 31, the funding ratio for public plans would be around 72%.
Regardless, he said, funding ratios are still low and should raise the concern of state officials.
The report estimates that as of June 30, the 125 plans had a total of $2 trillion in assets and would need to add $1 trillion to reach full funding.
“There is a big hole that needs to be made up,” he said. “The prudent and least disruptive way to get back to fully funded status is to increase the level of funding over time,” he said.