Connecticut starts new year with better pension funding



According to the latest valuations, Connecticut’s State Employees Retirement System (SERS) increased its overall funded ratio from 48.5 percent in 2022 to 52 percent in 2023, and the Teachers Retirement System (TRS) increased its funded ratio from 57 percent to 59.8 percent.

Although neither is considered healthy in terms of pension funding, it does mark a turnaround following years of increasing unfunded liabilities and, therefore, increasing annual payments toward the debt, increased taxes and contract negotiations with state employees that increased their contributions and lowered benefits to make up the difference.

Former Gov. Dannel Malloy had stated that Connecticut’s tax increases in 2011 and 2015 went entirely to pay for the escalating cost of state employee and teacher pensions.

While the year-over-year change seems somewhat small, the change in funding ratio over the past eight years is much more substantial. In 2016, SERS was only 36 percent funded with $20.3 billion in unfunded liabilities. While SERS continues to have roughly $20 billion in unfunded liabilities, its assets have grown by $10 billion during that period, significantly increasing the funding ratio.

Meanwhile, the unfunded liability for TRS has increased by $3.3 billion over that same time frame, but assets increased by nearly $8 billion, increasing the funded ratio from 56 percent to nearly 60 percent. The total unfunded debt for TRS currently stands at $16.4 billion.

Author(s): Marc E. Fitch

Publication Date: 2 Jan 2024

Publication Site: CT Inside Investigator