State Pension Reforms

States' public sector retirement funding gap for both pensions and retiree health benefits grew by $120 billion, from fiscal year 2009 to 2010. The largest part of that year-over-growth was the increase in pension liabilities. States are $757 billion short of funding their pension promises.

To meet these long-term pension obligations, nearly every state has moved to better manage its retirement bill in the last three years. Between 2009 and 2011, 43 states enacted benefit cuts, increased employee contributions, or both. The most common actions included:

•  asking employees to contribute a larger amount toward their pension benefits                            
  

  Infographic:Rhode Island's Pension Reforms

  Learn more about Rhode Island's pension reforms.

  
    
• increasing the age and years of service needed before retiring; 
    
•  limiting the annual cost of living increase; and
  
• changing the formula used to calculate benefits to provide a smaller pension check. 
  

Rhode Island’s Pensions Overhaul

The majority of reforms enacted in the last three years largely affect future state workers. However, some states are attempting more comprehensive reform in order to gain immediate cost savings.

In 2011, Rhode Island lawmakers approved an unprecedented overhaul of the state’s traditional defined benefit pension plan. If the legislation survives a likely legal challenge, it will cut benefits for current as well as future employees and trim the state’s unfunded liability by an estimated $3 billion. Learn more about Rhode Island’s pension overhaul.

Report Assets

• Full Report
• State Fact Sheets
• Press Release
• Pew's Work on Pension and Retiree Health Benefits

Data Visualizations

Interactive: The Widening Gap

This interactive presents data on states' funding of pensions and retiree health care as of fiscal year 2010.

Featured Collection

Pension and Retiree Health Benefits

Pension and retiree health care costs are rising sharply in the states. Learn more about Pew's work on retiree health benefits.