A new report shows there is a trillion-dollar gap between the amount of money promised to current and retired workers across the country and the amount states actually have on hand to pay them. The Trillion Dollar Gap is a report by the Pew Center on the States that calculates every state's pension outlook based on data from a variety of pension plans in each state.
Texas received a ranking of "needs improvement" in the two areas of pension funding, pensions and healthcare. Texas has the money to pay for 91 percent of accrued pension liabilities, the cost of benefits promised to current and future retirees over the next 30 years. The picture for healthcare benefits is not as sound, according to the researchers.
But, 35 percent of the covered payroll pension, the amount Texas is currently liable to pay out to current employees, has been left unfunded. In other words, if all state retirees who have benefits coming to them cashed out today, the state of Texas would be able to pay 65 percent of the bill.
According to the National Conference of State Legislatures, in 2008 and 2009 Texas along with five other states took steps to reduce benefits or increase the retirement age. The Pew report also points out that Texas along with the state of New Hampshire increased payroll contributions required from new employees last year.
"The Texas Municipal Retirement System may be the only large public sector pension system that was relatively unaffected by investment losses because of its very high bond allocation, according to KeithBrainard, research director at the National Association of State Retirement Administrators."
Other states receiving "needs improvement" rankings on healthcare benefits include neighboring Arkansas, Louisiana, New Mexico and Oklahoma.
Pew used data from major pension plans throughout the state including Employees Retirement System of Texas Plan, Teacher Retirement System of Texas, the Texas Statewide Emergency Services Retirement Act, and University of Texas System Employee Group Plan (UT Plan).