Top 10 States with Largest Pension Liabilities/Revenues Ratio

Moody’s Investor Service report, released on June 27, 2013, presented adjusted pension data for all 50 states in fiscal year 2011. Ten states had pension liabilities equal to or greater than their annual governmental revenues.  Of all the states, Illinois had both the largest Adjusted Net Pension Liability (ANPL), $133 billion, and the highest ANPL as a percentage of revenues, 241%.

Moody’s measures state pension liability by weighing each plan’s net pension liability – the difference between the projected benefit payments and the assets set aside to cover those payments – against state revenue.

After Illinois, Connecticut and Kentucky had the next highest pension burdens at 190% and 141%, respectively. Overall, the ANPL relative to all government fund revenues varies greatly, ranging from 6.8% to 241%. The states with the lowest pension burden are Nebraska, Wisconsin, and Idaho at 6.8%, 14.4%, and 14.8%, respectively.

According to Moody’s, the largest accumulated liabilities most often reflect management decisions not to fund pension contributions at levels reflecting actuarial guidelines.  For instance, six out of the ten states with the largest pension liabilities, Illinois, Connecticut, Kentucky, New Jersey, Hawaii, and Pennsylvania, had their credit score downgraded in the past three years due to this practice.