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LA Pension Gap Narrowed in 2017 but Remains Wide

 

Business Report • Baton Rouge, Louisiana • June 27, 2019

 

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Louisiana pension gap narrowed in 2017 but remains wide

By

Daily Report Staff

Louisiana had roughly $18.2 billion in pension systems debt in 2017, a decline of $2.5 billion from the year prior, though the state’s funded ratio still falls below the national average.

 

The Pew Charitable Trusts annual report on state pensions, released today, found that Louisiana has a funded ratio—or the percent of the assets needed to fully fund pension liabilities—of about 65%, compared to the national average of 69%.

 

In the net amortization benchmark, however, Louisiana pulled ahead of most other states. Net amortization evaluates whether contributions to the pension system are sufficiently reducing unfunded liabilities.

 

Louisiana’s pension system assets totaled $34 billion in 2017, while the state had $52 billion in liabilities—equaling $18.2 billion in pension debt. The year prior, Louisiana has $20.7 billion in pension debt, according to Pew, meaning the state improved in its ability to pay off the debt in 2017.

 

All 50 states, meanwhile, had a total liability of $4.1 trillion in pension obligations to workers and retirees in 2017 and $2.9 trillion in assets set aside to pay for those benefits, Pew reports, leaving a funding gap of $1.28 trillion.

 

The improved fiscal status of the states in 2017 was driven by strong investment returns, which lowered the collective funding gap by more than $133 billion. But Pew reports that states cannot rely on investment income alone to reduce pension debt.

 

“Pew has collected annual financial data on state-run pension systems since before the recession,” reads the report. “But even after nine years of economic recovery, states have made limited progress in paying down pension debt”

 

Read the full report.

 
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