Is My Pension Safe? How to Read Your Plan's Funded Ratio

If you work in the public sector, as a teacher, firefighter, police officer, or state employee, you likely have a defined benefit pension. But how do you know if that pension will actually be there when you retire?

The most important number to understand is the funded ratio.

What Is a Funded Ratio?

A funded ratio is the percentage of promised pension benefits that a plan has assets to cover. It's calculated as:

Funded Ratio = Plan Assets ÷ Plan Liabilities × 100%

A funded ratio of 100% means the plan has exactly enough assets to pay all promised benefits. Above 100% means it's overfunded (rare but possible). Below 100% means it's underfunded.

What Funded Ratio Is "Safe"?

The National Association of State Retirement Administrators (NASRA) and most pension experts use these benchmarks:

90%+: Well-funded. Minor gaps can be addressed through normal contributions.
80-90%: Adequately funded. Most plans fall here and can remain stable with proper contributions.
60-80%: Underfunded. Requires attention, higher contributions or some benefit adjustments likely needed.
Below 60%: Severely underfunded. These plans face significant risk of benefit cuts, tax increases, or both.
Below 40%: Critical. Cities like Detroit and Chicago's pension funds have operated in this range, leading to significant restructuring.

How PlainPension's Health Grades Compare

Alongside the raw funded ratio, PlainPension assigns each plan a composite A-F health grade that also weighs ARC payment discipline and investment returns, not the funded ratio alone. Here's how the 197 tracked plans currently break down:

How to Find Your Plan's Funded Ratio

You have several options to find your pension plan's funded ratio:

PlainPension: Search our database of 197 plans by state or plan name.
Your plan's annual report (CAFR): Every public pension is required to publish a Comprehensive Annual Financial Report.
The Public Plans Database: The academic database that powers PlainPension, available at publicplansdata.org.

Why Funded Ratios Change

Several factors affect a plan's funded ratio year to year:

Investment returns: Most plans target 7-7.5% annual returns. Poor market years reduce funded ratios significantly.
Employer contributions: If governments don't make their full Annual Required Contribution (ARC), the gap widens.
Benefit changes: Adding benefits without adding funding creates unfunded liability.
Actuarial assumptions: Changes in mortality rates, retirement ages, or salary assumptions affect liabilities.

The Annual Required Contribution (ARC)

The ARC is the amount an employer must contribute each year to keep a pension on track. When governments pay less than 100% of their ARC, unfunded liabilities grow even if investments perform well.

On PlainPension, we show the ARC payment percentage for each plan, a key indicator of whether the funding gap is being addressed or growing.

What Happens to Your Pension If the Fund Is Underfunded?

Being underfunded doesn't mean your pension will disappear, but it creates real risks:

Future benefit accruals may be reduced for current employees
COLA (cost of living adjustments) may be suspended
Local taxes may increase to fund required contributions
In extreme cases, bankruptcy (like Detroit in 2013) can lead to benefit cuts for current retirees

Most state pensions have legal protections against benefit cuts for already-earned benefits. But these protections vary by state.

What You Can Do

Check your plan's funded ratio using our state-by-state database
Attend your pension board's public meetings
Consider supplemental retirement savings (457(b) or IRA) if your plan is significantly underfunded
Advocate for full ARC payments by your employer/government

Frequently asked questions

Where does this data come from?

All figures on this page derive from the Public Plans Database (Boston College Center for Retirement Research and NASRA). We cite the underlying series in the methodology section. No proprietary aggregators are used.

How often are figures updated?

Plan records become available on different reporting schedules. We check the PPD release history and API on a recurring 90-day clock, then validate and publish a new snapshot when the upstream data changes. The methodology page documents that release monitor.

Can I use this data for my own analysis?

Yes, with attribution. The underlying Public Plans Database is published by Boston College CRR under its own research license, not public domain -- see publicplansdata.org for its terms if you need the raw dataset for bulk reuse. Our presentation, calculations, and editorial commentary are licensed for individual reference. For commercial republication or large-scale data extraction, contact us at the email listed on the contact page.

What if the figures here disagree with another source?

Different sources use different methodologies, definitions, geographic boundaries, and reference periods, disagreement is normal and informative. Our methodology page documents exactly which series and reference period we use for each metric, so you can reproduce or audit the figures against the upstream agency directly.