Across the country, states have been making headlines about the financial dangers caused by massive unfunded pension liabilities. However, in Tennessee, the headline tells a more positive story.
In 2017, the Tennessean reported, the state’s pension plan for state workers exceeded its investment targets—an 11.4 percent gain over a 7.5 percent returns target. This helps offset the impact of weaker returns—between 2 and 4 percent—in fiscal years 2015 and 2016. The Tennessee Consolidated Retirement System covers 350,000 state retirees and active workers.
Despite lower returns in 2015 and 2016, Tennessee was one of only eight states that had a pension fund that was more than 90 percent funded in 2015. The pension funds in nineteen states, meanwhile, were less than 70 percent funded. As of 2015, the overall gap nationwide between state pension fund assets and the benefits that have been promised to workers is 17 percent, or $1.1 trillion. This puts many pension funds and state budgets at tremendous risk if there is another economic downturn, but Tennessee is in a strong position.