Pension Reform at a Glance
What You Need to Know
- Pension reform takes place when legislative or policy action is taken to improve the funding mechanisms and payment methods of the states’ critically underfunded pension systems.
- Pension reform is necessary across the country, as the latest estimates of pension program shortfalls reached $5.4 trillion in 2016; shortfalls that threaten to bankrupt many states if not addressed in short order.
- Unfunded and underfunded public pension liabilities exceeded $6 trillion in 2017; debts that will cripple states if allowed to grow.
- Pension reform is a bipartisan issue, and is necessary to help states keep their promises to retirees and current employees.
- The most well-funded state pension fund is still only 63.4 percent funded, while the worst-funded program receives only 22.8 percent of its necessary funding.
- The mean national level of funding for state pension benefit funds is now 35 percent, and represents a burden of $17,427 on every man, woman, and child in the United States.
- State legislators are beginning to realize the gravity of the situation; in the first half of 2017, Pennsylvania, Michigan and Texas passed bills to bring comprehensive reform to their pension programs.
- Illinois currently has two pension reform bills in committee, indicating a favorable climate for legislation on this issue.
ALEC Model Policy
Unaccountable and Unavoidable 2017: Unfunded Public Pension Liabilities Exceed $6 Trillion
Unaccountable and Unavoidable 2016: An index illustrating the depth of the pension reform issue