U.S. Pension Tracker

Pension Tracker Project Director

Bill Lane Center for the West

Most of the categories on U.S. Pension Tracker come directly from official sources, notably Comprehensive Annual Financial Reports (CAFRs) provided by state pension systems. Population and household data are from the U.S. Bureau of the Census, and U.S. Treasury yields are from the U.S. Department of the Treasury. State expenditures and revenues are from the National Association of State Budget Officers (NASBO). Other categories are calculations or estimates, as described below. This section describes data sources and methodology in presenting or calculating each category. See the Glossary for definitions.

Users may obtain the entire U.S. Pension Tracker database by sending a request to joenation@stanford.edu.

**United States Pension Debt**

Market Pension Debt reflects Market Liabilities, which uses a market discount rate equal to the CalPERS discount rate, minus the Value of Assets for all state and local systems. The CalPERS market discount rate ranged between 3% and 4.5% between 2008 and 2019. The use of this discount rate is intended, as CalPERS is the largest US public pension. Market Pension Debt Per Household equals Market Pension Debt divided by the total number of U.S. households.

Actuarial Pension Debt reflects reported Actuarial Liabilities using discount rates reported by most systems, currently an average of about 7.2%, minus the Value of Assets for all state and local systems. Actuarial Pension Debt Per Household equals Actuarial Pension Debt divided by the total number of U.S. households. Rankings exclude systems where data is not available.

United States population and household figures are from the U.S. Bureau of the Census and reflect July 1st figures in each year.

**Summary and Detailed Table Categories**

The following categories reflect values reported by state pension systems in annual financial reports.

*Assets, Liabilities and Unfunded Liabilities*

- Actuarial Liability (All State Systems; see below for Local Systems)
- Assumed Rate of Return (All State Systems; see below for Local Systems)
- Value of Assets (Market or fair Value of Assets) (All State Systems; see below for Local Systems).

Sources: Comprehensive Annual Financial Reports or annual actuarial valuations.

*State Demographics*

- Population
- Households

Sources: U.S. Bureau of the Census, Factfinder.

*Budget & Revenue*

- State General Fund Expenditures ($)
- State Total Expenditures ($)
- State Total General Fund Revenues ($); District of Columbia revenues include tax revenues only.

Sources: National Association of State Budget Officers, State Expenditure Reports; District of Columbia Office of the Chief Financial Officer

**Data for the following categories are calculated, estimated, or assumed as indicated:**

*Assets, Liabilities, and Unfunded Liabilities*

- Actuarial Liability (Local Systems): Estimated based on the ratio of local to state market assets provided in the Annual Survey of Public Pensions and reported Actuarial Liability in Comprehensive Annual Financial Reports or annual actuarial valuations. Actuarial Liability for Local Systems = All State Systems Actuarial Liability*(local assets divided by state system assets). Note that this assumes a Local System funded ratio equal to the funded ratio for All State Systems.
- Assumed Rate of Return (Local Systems): Assumed equal to All State Systems Rate of Return weighted by All State Systems assets as reported in Annual Survey of Public Pensions.
- Value of Assets (Local Systems): Estimated based on the ratio of local to state market assets provided in the Annual Survey of Public Pensions and reported Value of Assets in Comprehensive Annual Financial Reports or annual actuarial valuations. Value of Assets for Local Systems = All State System Value of Assets*(local assets divided by state system assets).
- Market Liability: We estimate that the average liability of each pension plan or aggregation of plans has a duration of 13 years, where duration = log(Market Liability/Actuarial Liability)/log(Assumed Rate of Return/Market Discount Rate). This estimate is based on reported market and actuarial liabilities from the California Public Employees Retirement (CalPERS) in 2011-2019. We apply this assumption to each pension system, or each aggregation of pension systems in each state for all years. We then converted the reported Actuarial Liability (AL) into an equivalent single payment 13 years hence by compounding it at the reported Assumed Rate of Return (ar), giving a future value FV = AL*[(1+ar)^13]. Then we discounted this single amount 13 years hence at the Market Discount Rate (mr) giving a Market Liability ML = FV/(1+mr)^13. For example, in 2019, the CalPERS system used an Assumed Rate of Return of 7.0%, so (1+ar) = 1.07; we used a Market Discount Rate of 3.25% so (1+mr) = 1.0325 based on the 2019 CalPERS high termination rate scenario. Note that the same results can be obtained by multiplying each Actuarial Liability for any state system by a ratio equal to [(1+ar)/(1+mr)]^13. For CalPERS in 2019, the ratio equals (1.07/1.0325)^13 = 1.5901, so the Market Liability is assumed to equal 1.5901 times the Actuarial Liability. For Alaska's PERS in 2019, on the other hand, Actuarial Liabilities are based on an Assumed Rate of Return of 7.38% so the Market Liability was assumed to equal (1.0738/1.0325)^13 or 1.665 times the reported Actuarial Liability.
- Market Discount Rate: The High Termination Liability Discount Rate for CalPERS in 2019.
- Market Pension Debt: Market Liability minus Value of Assets.
- Actuarial Pension Debt: Actuarial Liability minus Value of Assets.

Sources: U.S. Bureau of the Census, Annual Survey of Public Pensions; U.S. Department of the Treasury, Resource Center

*Funded Ratios*

- Market Funded Ratio: Value of Assets divided by Market Liability
- Actuarial Funded Ratio: Value of Assets divided by Actuarial Liability.

*Unfunded Liability Metrics*

__Market Pension Debt__

- Market Pension Debt/Household: Market Liability divided by Households.
- Market Pension Debt/Capita: Market Liability divided by Population.
- Market Pension Debt/State General Fund Expenditures: Market Liability divided by State General Fund Expenditures.
- Market Pension Debt/State Total Expenditures: Market Liability divided by State Total Expenditures.
- Market Pension Debt/State Total General Fund Revenues: Market Liability divided by State Total General Fund Revenues.

Higher numbers are worse; lower numbers are better in assessing overall pension system financial health.

__Actuarial Pension Debt__

- Actuarial Pension Debt/Household: Actuarial Liability divided by Households.
- Actuarial Pension Debt/Capita: Actuarial Liability divided by Population.
- Actuarial Pension Debt/State General Fund Expenditures: Actuarial Liability divided by State General Fund Expenditures.
- Actuarial Pension Debt/State Total Expenditures: Actuarial Liability divided by State Total Expenditures.
- Actuarial Pension Debt/State Total General Fund Revenues: Actuarial Liability divided by State Total General Fund Revenues.

Higher numbers are worse; lower numbers are better in assessing overall pension system financial health.