State Pensions Could Be 61 Percent Underfunded

States have only 39 percent of the assets they need to cover their public employee pension obligations, according to an estimate from State Budget Solutions, a non-partisan, non-profit, national public policy organization. That estimate is based on an annual investment return of 3.2 percent (the 15-year Treasury bond yield as of August, 2013), instead of the 7 to 8 percent rate most of the pension plans themselves use, a rate which many critics say is overly optimistic. By that more conservative standard, the most funded pensions, in Wisconsin, are still underfunded by 43 percent. Illinois' pensions, the least funded, are underfunded by 76 percent.

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