Top Public Pension Plans Ranked by Debt and Investment Returns: Insights into the Most and Least Successful Funds

Pension Debt Crisis Deepens: $1.48 Trillion Threatens States and cities

Washington D.C. – A recently released analysis indicates that the financial strain on America’s public pension systems remains notable, with a combined $1.48 trillion in unfunded liabilities as of 2024. The report,detailing the fiscal health of pension funds across the nation,reveals a growing challenge for state and local governments,potentially jeopardizing critical public services and necessitating difficult budgetary decisions.

Significant Debt Levels Across State Pension Funds

Forty-four public pension systems across the United States currently carry debt exceeding $10 billion, a stark indication of the widespread nature of this issue. The California Public employees’ Retirement System (CalPERS) tops the list with a staggering $166 billion in unfunded liabilities, the highest in the country. Eighteen plans now face obligations exceeding $20 billion, with nine surpassing $30 billion.

Teacher’s retirement systems represent a significant portion of the overall debt. The Illinois Teachers Retirement System is second highest with $83 billion in unfunded liability, followed by the Texas Teacher Retirement System at $63 billion.other major contributors include plans in Pennsylvania, New Jersey, and California.

Pension System	Unfunded Liabilities (Billions)
California Public Employees’ Retirement System (CalPERS)	$166
Illinois Teachers Retirement System	$83
Texas Teacher Retirement System	$63
Pennsylvania Public School Employees’ Retirement System	$43
New Jersey Teachers’ Pension and Annuity Fund	$41

Debt Reduction, But With Notable Exceptions

While the aggregate debt decreased by 9%, falling from $1.62 trillion in 2023 to $1.48 trillion in 2024, several pension systems experienced an increase in their unfunded liabilities during the same period. The Maryland Teachers’ Retirement System recorded the largest rise, with an additional $1.54 billion in debt.

the Massachusetts and Illinois Teachers’ Retirement Systems also saw their debts grow by over $1 billion each. Five additional plans experienced increases exceeding $500 million.

Investment Performance Varies Widely

The 2024 fiscal year presented a favorable investment climate, yet performance varied considerably among public pension plans. the median investment return was 9.88%.Though, the Fire Fighters’ Relief and Retirement Fund of Austin, Texas, lagged behind, earning only a 4.7% return, resulting in a notable increase in its debt.

Conversely, several plans achieved remarkable returns, with the Miami General Employees and Sanitation Employees Plan leading the nation at 24%. The Michigan Legislative Retirement System, alongside funds in Alabama, also surpassed 20% returns.

Did You Know? A substantial disparity exists between the highest and lowest performing pension funds, highlighting the importance of effective investment strategies and risk management.

These findings underscore the precarious state of public pensions and the urgent need for sustainable solutions to safeguard the financial future of both public employees and taxpayers. Experts suggest that diversifying investment portfolios, adjusting benefit structures, and increasing contributions are crucial steps towards addressing this complex issue.

Pro Tip: Regularly monitoring pension fund performance and advocating for clear financial reporting can empower citizens to hold their governments accountable.

Will states prioritize pension reform to ensure long-term stability, or will the debt continue to escalate? What innovative investment strategies can be implemented to mitigate risk and maximize returns?

Understanding Public Pension Debt

Public pension debt occurs when the promised retirement benefits of public employees exceed the funds available to pay them. This shortfall accumulates over time due to factors such as insufficient contributions, lower-than-expected investment returns, and increased life expectancies. Addressing this debt is crucial for maintaining the financial health of state and local governments and ensuring the retirement security of public workers. Long-term solutions can include a mix of increased funding contributions, benefit reforms, and strategic investment management.

Frequently Asked Questions About Public Pension Debt

• what is public pension debt? Public pension debt represents the difference between the assets available and the projected future benefit payments owed to public employees.
• How does pension debt impact taxpayers? Unfunded pension liabilities frequently enough lead to increased taxes or cuts in essential public services to cover the shortfall.
• What are some causes of pension debt? Common causes include underfunding, poor investment performance, and demographic shifts impacting life expectancies.
• Can pension debt be reduced? Yes, through strategies like increased contributions, benefit adjustments, and improved investment management.
• What is the role of investment returns in pension funding? Higher investment returns help to grow pension fund assets, reducing the need for increased contributions or benefit reductions.
• Are all public pension systems facing debt challenges? While many systems face challenges, the severity varies significantly depending on factors likes funding levels and investment strategies.
• How can citizens stay informed about their state’s pension system? Citizens can access public pension fund reports and track performance through state government websites.

Share your thoughts on this critical issue in the comments below,and let us know what steps you believe should be taken to address the growing pension debt crisis.

How do actuarial assumptions impact the reported health of public pension funds like CalPERS?

Understanding Public Pension Fund Health

Public pension plans are crucial for the retirement security of millions of teachers, firefighters, police officers, and other public sector employees. However, manny face notable financial challenges, stemming from factors like underfunding, demographic shifts, and market volatility. Evaluating the health of these funds requires a close look at both their debt (unfunded liabilities) and their investment returns. This article ranks top public pension plans, analyzing their performance and offering insights into what makes some funds more successful then others. We’ll cover key metrics like funded ratio, investment performance, and actuarial assumptions.

Ranking Public Pension Plans by Debt (Unfunded Liabilities) – 2025 Data

Here’s a snapshot of some of the largest U.S. public pension plans, ranked by their estimated unfunded liabilities as of late 2025 (data sourced from various state reports and independent analyses – note: figures are constantly evolving):

1. California Public Employees’ Retirement System (CalPERS): ~$170 Billion Unfunded Liability. Despite being the largest public pension fund, CalPERS faces a substantial debt burden.
2. New York State Teachers’ Retirement System (NYSTRS): ~$85 Billion Unfunded Liability. NYSTRS consistently grapples with significant liabilities.
3. Illinois Pension Funds (Aggregate): ~$140 billion Unfunded Liability.Illinois consistently ranks among the states with the worst-funded pension systems. This includes funds like the Teachers’ Retirement System and the State Universities Retirement System.
4. Pennsylvania Public School Employees’ Retirement System (PSERS): ~$70 Billion Unfunded Liability. PSERS has been working to address its funding gap thru contribution increases and investment strategies.
5. Texas Teacher Retirement System (TRS): ~$50 Billion Unfunded Liability. While Texas has a strong economy,its teacher pension fund still carries a considerable debt.

Critically important Note: These figures are estimates and subject to change based on actuarial valuations and market conditions. “Unfunded liability” represents the difference between the present value of promised benefits and the present value of assets available to pay those benefits.

Top Performing Public Pension Funds by Investment Returns (Past 5 Years)

Investment returns are vital for reducing debt and ensuring long-term sustainability. Here’s a look at funds that have demonstrated strong performance over the past five years (2020-2025):

1. Indiana Public Retirement System (INPRS): Average Annual Return: 9.8%. INPRS has benefited from a diversified portfolio and strategic asset allocation.
2. Utah Retirement Systems (URS): Average Annual Return: 9.5%. URS is known for its long-term investment horizon and focus on private equity.
3. Washington State Investment Trust (WSIT): Average Annual Return: 9.2%.WSIT’s success is attributed to a well-managed portfolio and a commitment to risk management.
4. Maryland State Retirement and Pension System (MSRPS): Average Annual Return: 8.9%. MSRPS has consistently delivered strong returns through a diversified investment strategy.
5. Arizona State Retirement System (ASRS): Average Annual Return: 8.7%. ASRS’s performance is driven by a focus on cost-effective investing and a long-term perspective.

Disclaimer: Past performance is not indicative of future results. Investment returns can fluctuate significantly based on market conditions.

key Factors Driving Pension Fund Success

Several factors contribute to the success (or failure) of public pension funds:

* Funding Policies: consistent and adequate contributions from employers and employees are essential. States that consistently meet their actuarially determined contributions (ADC) tend to have healthier pension systems.

* Investment Strategy: diversification, a long-term investment horizon, and a willingness to invest in alternative assets (like private equity and real estate) can boost returns.

* Actuarial Assumptions: Realistic assumptions about investment returns, inflation, and mortality rates are crucial for accurate valuations. Overly optimistic assumptions can mask underlying problems.

* Governance & Transparency: Strong governance structures and clear reporting practices build trust and accountability.

* Demographic Trends: Changes in the workforce (e.g., retirements, hiring) impact pension obligations.

The Role of Alternative Investments

Many successful pension funds are increasing their allocations to alternative investments. These include:

* Private Equity: Offers the potential for higher returns but also carries greater risk and illiquidity.

* Real Estate: Provides diversification and a hedge against inflation.

* Infrastructure: Offers stable,long-term cash flows.

* Hedge Funds: Employ a variety of strategies to generate returns, but fees can be high.

Case Study: CalPERS and Private Equity: CalPERS has significantly increased its private equity allocation in recent years,