Report: Tennessee has the lowest unfunded pension liabilities per capita in the United States | Tennessee


(The Center Square) – Tennessee once again had the lowest unfunded pension liability in the United States, according to the new rankings of the US Legislative Executive Council.

But that liability went from $6,345.77 per capita in 2011 at $8,511.92 per capita in the new 2022 ranking.

Connecticut, Illinois and Alaska had the highest unfunded liabilities per capita, with Alaska ranking 50th at $42,829.

Tennessee also topped the list for unfunded liabilities as a percentage of gross state product at 15.47%, while Indiana was second at 18.33% and Mississippi was the worst at 80.85. %.

“This year, we found that there were $8.2 trillion in unfunded liabilities in state pension plans,” explained ALEC’s vice president of policy and author of the report. study, Lee Schalk.

The study uses a risk-free discount rate (the rate of return on a pension plan’s investments), expressed as a percentage, to determine the value of the liabilities these funds will have to pay over the next few decades.

This discount rate used by ALEC to determine the pension obligation is based on US Treasury bond yields (down from 2.34% to 1.13% due to historically low interest rates) and a fixed discount rate of 4.5% which is considerably lower than the discount rate expected by most pension funds. The Tennessee fund has a expected discount rate of 7.25%.

The report is the sixth edition of the ALEC annual report, which reviews government pension plans and their assets and liabilities. The report says the liability is “$25,000 for every man, woman and child in the United States.”

Tennessee ranked 16th in overall liabilities with $58.8 billion in unfunded pension liabilities. Vermont was the lowest at $14.4 billion while California pledged $1.5 trillion in unfunded liabilities.

“If private sector CEOs and CFOs signed off on financial statements with the accounting used by state and local governments, they’d be in jail,” said Jonathan Williams, ALEC’s executive vice president of policy. “It’s the kind of Enron-style accounting, unfortunately, that’s been going on for far too long in state and local governments. And so our report goes through some of the bad accounting and really gives an apples-to-apples comparison of how whose states are funding, or in many cases, unfortunately, not funding, pension obligations.”


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