The median funding ratio for state-sponsored pension plans was 71.5 percent in 2014, virtually unchanged from the previous year, according to Fitch Ratings.
While several years of strong stock market gains have helped to offset pension liabilities, funding levels remain well below pre-recession levels, in part because fewer government workers are being hired as more retire, meaning fewer lives available to pay into plans, according to Fitch.
In 2007, the median funding ratio topped out at 84.7 percent, and fell to a low of 68.9 percent in 2012, according to the ratings agency.
“Unlike asset portfolios that are prone to year-to-year cyclicality, pension liabilities have risen steadily for all but a handful of closed systems because active employees continue to accrue benefits as they work,” said Douglas Offerman, senior director at Fitch.
Offerman also said the general reluctance to implement benefit reforms, such as cost-of-living adjustment reductions for existing retirees, has also stalled public pensions’ funding recovery.
Last year, the median ratio of active employees to retirees and beneficiaries fell to 1.4, a considerable drop from the 1.9 workers for every retiree and beneficiary in 2008.
Longer retirements are also resulting in higher benefit payment obligations, Offerman said in a statement.
“Headcount for numerous state and local governments has been stagnant while weakening demographics is shifting more of the contribution burden onto government employers,” he added.
On the positive front, 53 percent of major state-sponsored plans report receiving 100 percent of required contributions.
That is up from 42 percent in 2011, the post-recessionary low point. The average contribution was 91.4 percent of required levels in 2014.
The median debt burden was 2.4 percent of personal income in 2014, while the median pension burden was 3.7 percent of personal income.
New data compiled by Bloomberg shows the median state pension funding level at 70 percent, up from 69.2 percent in 2013.
And recent analysis from Truth in Accounting, a non-profit that advocates for greater transparency in government accounting, shows that only 19 percent of a total of $1.2 trillion in states’ pension liabilities is actually being accounted for.
That means $956 billion in retirement liabilities are effectively being hidden, according to the advocacy group.