Connecticut’s State Employees Retirement System (SERS) has unfunded pension liabilities of $21.2 billion, and a funded level of only 38% as of June 30, 2018, according to recently released data from the state’s Office of Fiscal Analysis.
The information, which came from a SERS employee fact sheet released by the Office of Fiscal Analysis, shows that the retirement system’s liabilities have been growing at a far faster pace than its assets since at least 2011. SERS is the state’s defined benefit plan for approximately 50,000 active and retired state employees.
According to the fact sheet, between June 30, 2011, and June 30, 2018, the retirement system’s assets rose $2.9 billion to $13 billion from $10.1 billion. However, during that same time period, its unfunded liabilities ballooned to $21.2 billion from $11 billion, and the system’s funded ratio fell to 38% from 48%.
State contributions to the retirement system have also increased sharply over the past decade, more than doubling to $1.57 billion in 2019 from $753.7 million in 2009. The fact sheet also shows that the state’s contributions to the retirement system will rise to $1.62 billion in 2020, and $1.74 billion in 2021.
According to conservative think tank Yankee Institute, Connecticut underfunded the state pension by 7% in 2009, and continued paying less than the required amount by as much as 20% through 2011. It said that although state law required the pension system to be fully funded by 1985, and for that funding to be maintained, deals between union leaders and past governors overrode that statute and allowed Connecticut to stiff the pension system.
The state tried to make amends for this shortfall by maintaining 100% funding from 2012 through 2014, and approximately 99% through 2017, but it was too late.
“The few years of fully funding the pension system was not enough to undo two decades of short-changing the pension system,” wrote Yankee Institute’s Marc Fitch.
A March report from The American Legislative Exchange Council (ALEC) placed Connecticut 49th out of 50 states in terms of unfunded liabilities per capita at $32,805—second only to Alaska, and compared with the overall average of $18,300 per capita among all 50 states. The state was also ranked 42 out of 50 in terms of unfunded liabilities as a percentage of the gross state product at 45.13%.
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Tags: Connecticut's State Employees Retirement System, Funded Status, Pension, Yankee Institute