This report identifies key factors that contribute to the health of state employee pension systems, and uses these key factors to assess and compare the health of state employee pension systems in Connecticut with other peer states.
In fiscal year 2000, the national average funded ratio of state pension plans was over 100 percent. However, a downturn in stock markets caused the funded ratio of state pension plans nationwide to decline. The Great Recession, which officially began in 2007, exacerbated this trend and the funded ratio of state pension plans has continued to decline. Actual rates of return on investments of pension assets routinely fell short of projected rates of return, which caused annually required contributions to pension systems to increase.
The Great Recession also negatively impacted overall tax revenues causing many states to have trouble making the annually required contributions to their pension systems. Despite difficult economic conditions, some pension systems have maintained healthy funded ratios, while others – including Connecticut – have not.
Citation
Connecticut School Finance Project. (2018). Factors Contributing to Health of State Employee Pension Funds. New Haven, CT: Author. Retrieved from https://schoolstatefinance.org/resource-assets/Factors-Contributing-to-Health-of-State-Pension-Funds.pdf.