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

Updated March 2026 · 6 min read · Source: Public Plans Database

Compiled by the Kiznis Studio research team.

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 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

Related: Federal Employee Retirement (TSP) · Cost of Living by Metro

A worked example

Consider a household earning $75,000 per year facing an annual cost of $18,000 for the service this guide covers. Their cost-to-income ratio is 24% — below the 30% red-line that federal affordability frameworks use to flag burden. By comparison, a household at $45,000 facing the same $18,000 cost lands at 40% — well into severely-burdened territory under the same definitions.

Where to dig deeper

The methodology page documents exactly which federal series we draw from, how we weight regional differences, and the reference period for each metric. The research section publishes original analyses derived from the same underlying database — useful when you want to see year-over-year shifts or peer-jurisdiction comparisons that the per-page detail views don't surface.

ThresholdFederal definitionPractical meaning
Below 7%AffordableComfortable margin for unexpected expenses
7-30%Moderate burdenManageable but constrains discretionary spending
Above 30%BurdenedHUD definition — qualifies for federal subsidy programs
Above 50%Severely burdenedTrade-offs with food, healthcare, savings

Frequently asked questions

Where does this data come from?

All figures on this page derive from official federal data — primarily the U.S. Bureau of Labor Statistics, U.S. Census Bureau, U.S. Department of Health and Human Services, and U.S. Department of Labor. We cite the underlying agency and series in the methodology section. No proprietary aggregators are used.

How often are figures updated?

Each series follows its own publication cadence. We refresh our database within 30 days of each upstream release. Specific update timestamps appear in the page footer where available; the methodology page documents the cadence per data series.

Can I use this data for my own analysis?

Yes. The underlying federal data is public domain. 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.

Calculator Plug your numbers in Methodology How we computed this Research Original analysis By state Drill into your jurisdiction