Texas Pension Woes
Authors: Dennis W. Jansen, Liqun Liu, Carlos I. Navarro, Andrew J. Rettenmaier
Date: April 2021
The unfunded liabilities from Texas’ many state and local defined benefit pension plans, or the amount a pension fund’s assets cannot cover its liabilities, have snowballed over time and have recently reached unprecedented levels. In 2019, their collective assets were less than their liabilities by $86 billion and the funding ratio of their assets to liabilities was 77%. Although these numbers are concerning, they are based on governmental accounting methods that mask the true state of affairs.
In policy study 2103, using data from 99 pension plans, authors Dennis W. Jansen, Liqun Liu, Carlos I. Navarro, and Andrew J. Rettenmaier analyze the pension funds in Texas though 2019. They calculate the pensions’ liabilities and funding ratios using alternative discount rates and then discuss a range of potential reforms.
Texas, pension, defined benefit, defined contribution, funding ratio