States have promised at least $2.73 trillion in pension, healthcare, and other retirement benefits for public employees over the next three decades, according to a report released Dec. 18 by The Pew Charitable Trusts’ Center on the States. Promises with a Price finds that states have saved enough to cover about 85 percent of their long-term pension costs, but only 3 percent of the funds needed for promised retiree health care and other nonpension benefits. All told, states already have set aside about $2 trillion to meet their long-term obligations. But they still need to come up with about $731 billion--a conservative figure that does not include all costs for teachers and local government employees.
However, a range of promising approaches are being used by an increasing number of states. For example, at least five states offer hybrid pension plans that combine elements of both defined benefit and defined contribution plans, and at least 13 states have set up irrevocable trusts to pay for retiree health care in years to come. Download the report.
