Source: Pew Trusts
Thanks to more than a decade of fiscal discipline, many state public retirement systems are on the cusp of long-term solvency and sustainability. Since the Great Recession, state policymakers have increased employer and employee pension contributions and changed benefit provisions. In some cases, they have also implemented reforms that have strengthened risk management practices, which can help keep costs relatively stable without increasing unfunded liabilities for future generations of taxpayers. However, volatile investment markets and high inflation make it clear that pension plans cannot ignore economic risk and uncertainty—or invest their way out of funding challenges. States that act now to build on contribution gains made over the past 10 years will be better positioned to weather economic downturns and move their retirement systems closer to long-term funding sustainability.