California 408 Billion in Unfunded Pension Liabilities: Top 10 State Totals

Findings

California leads at $408.79 billion aggregate unfunded liability

PlainPension dataset tracks 51 US state and territory public pension summaries, where California tops the states table at $408.79 billion aggregate unfunded liability across 15 indexed plans.Public Plans Database — Center for State and Local Government Excellence These 15 plans post 77.5 percent average funded ratio in the dataset's state summaries.Pew Charitable Trusts — State Pension Funding Gap Report California state summaries draw from 197 underlying plans total in PlainPension, with 4718 plan-year financial records supporting liability and funded ratio columns. California pension profile exposes these plan counts alongside unfunded liability totals from the Public Plans Database.

Texas state summaries in PlainPension show 12 indexed plans contributing to $137.47 billion aggregate unfunded liability, below California's 15 plans and 77.5 percent average funded ratio benchmark. Louisiana records 9 indexed plans at $79.45 billion unfunded liability in the states table, pairing with 72.4 percent average funded ratio across its plans data. Virginia lists 5 indexed plans at $53.16 billion unfunded liability, matching 72.4 percent average funded ratio in PlainPension summaries. PlainPension dataset aggregates these state-level figures from 4718 plan-year records, enabling unfunded liability rankings for all 51 jurisdictions.

Illinois state summaries capture 10 indexed plans with $61.08 billion aggregate unfunded liability and 76.8 percent average funded ratio, positioning below California's lead entry. PlainPension plans data for California spans 77.5 percent average funded ratio despite the $408.79 billion shortfall, as recorded in state summaries table. Data methodology details how PlainPension reproduces Public Plans Database figures for 197 plans nationwide.

New York Texas Ohio Washington complete the top-burden tier

New York ranks second in PlainPension states table at $243.84 billion aggregate unfunded liability across 7 indexed plans, with 87.1 percent average funded ratio.Public Plans Database — Center for State and Local Government Excellence Texas follows at $137.47 billion unfunded liability over 12 indexed plans, recording 73.4 percent average funded ratio in the dataset summaries.Government Finance Officers Association — Public Sector Pension Research Ohio entries list $121.36 billion aggregate unfunded liability from 5 indexed plans, while Washington totals $98.44 billion across 2 indexed plans at 73.7 percent average funded ratio. PlainPension dataset covers these top burdens within 51 state summaries and 197 plans total.

Top-5 burden states in PlainPension—California, New York, Texas, Ohio, Washington—sum to $1.010 trillion aggregate unfunded liability, spanning 41 indexed plans from the 197 total.Pew Charitable Trusts — State Pension Funding Gap Report New York’s 7 plans achieve 87.1 percent average funded ratio, exceeding Texas 73.4 percent across 12 plans in states table. Washington’s 2 plans contribute $98.44 billion unfunded liability, aligning funded ratio at 73.7 percent per PlainPension records. New York pension profile provides plan-level access to these 4718 plan-year financial records.

Louisiana state summaries add $79.45 billion unfunded liability from 9 indexed plans at 72.4 percent average funded ratio, extending the burden tier in PlainPension dataset. Wisconsin records $59.54 billion across 3 indexed plans with 80.4 percent average funded ratio, below top-5 totals. Texas pension profile details 12 plans' role in $137.47 billion unfunded liability, drawn from Public Plans Database sources.

Ohio's 66.8 percent average funded ratio is the lowest among top-10 burden states

Ohio state summaries in PlainPension dataset show 66.8 percent average funded ratio across 5 indexed plans, backing $121.36 billion aggregate unfunded liability—the lowest funded ratio in the top-burden tier. Iowa ranks tenth at $48.42 billion unfunded liability over 3 indexed plans, posting 58.5 percent average funded ratio as the lowest in the top-10 burden states.Government Finance Officers Association — Public Sector Pension Research Ohio’s 66.8 percent trails New York 87.1 percent and Wisconsin 80.4 percent in the states table. PlainPension indexes these ratios from 4718 plan-year records across 197 plans.

California’s 15 plans hold 77.5 percent average funded ratio despite $408.79 billion unfunded liability, surpassing Ohio’s 5 plans at 66.8 percent. Virginia’s 5 plans match 72.4 percent average funded ratio with $53.16 billion unfunded liability, above Ohio levels in PlainPension summaries. Illinois 10 plans record 76.8 percent average funded ratio at $61.08 billion unfunded liability. Ohio pension profile links funded ratio columns to underlying Public Plans Database entries for 51 states.

Washington 73.7 percent average funded ratio across 2 plans exceeds Ohio 66.8 percent, contributing $98.44 billion to top burdens. Louisiana 72.4 percent over 9 plans and Texas 73.4 percent across 12 plans both outpace Ohio in states table. PlainPension dataset reveals Iowa’s 58.5 percent as top-10 low, from 3 plans totaling $48.42 billion unfunded liability.

PlainPension dataset state summaries place California’s $408.79 billion unfunded liability across 15 plans and 77.5 percent funded ratio at the top, followed by New York $243.84 billion over 7 plans at 87.1 percent, Texas $137.47 billion from 12 plans at 73.4 percent, Ohio $121.36 billion via 5 plans at 66.8 percent, and Washington $98.44 billion across 2 plans at 73.7 percent—summing top-5 burdens to $1.010 trillion from 41 indexed plans within 197 total and 4718 plan-year records for 51 states. Ohio’s 66.8 percent funded ratio marks the top-burden tier low, while Iowa’s 58.5 percent sets the top-10 floor, as Public Plans Database figures show variation in plan counts driving aggregate shortfalls despite funded ratio ranges from 58.5 percent to 87.1 percent.

Comparative jurisdictional notes

Public pension plans tracked in the Public Plans Database are predominantly defined-benefit (DB) single-employer arrangements sponsored by state or local governments, contrasting sharply with the private-sector landscape where defined-contribution (DC) 401(k) and 403(b) plans now dominate worker coverage. Single-employer DB plans like CalPERS, CalSTRS, and NYSLRS pool actuarial risk across one sponsor, whereas multiemployer plans (common in Taft-Hartley industries) spread that risk across multiple contributing employers. Multiple-employer plans split the difference, allowing several unrelated employers to share a plan administrator without joint-liability provisions. National Association of State Retirement Administrators — NASRA Public Fund Survey, 2024

State-sponsored systems differ from federal plans (FERS, CSRS, TSP) in funding mechanics: federal civilian retirement is paid through Treasury appropriations rather than a pre-funded actuarial pool, while state plans must hit annual required contribution (ARC) targets to maintain funded ratios. Among state systems, control-state vs license-state administrative models do not apply to pensions — but parallel jurisdictional carve-outs exist between systems that consolidate teachers, public-safety, and general employees into one trust (e.g. Wisconsin Retirement System) versus systems that segregate by occupation (Texas TRS for teachers, ERS for general employees, separate municipal and county systems). Public Safety Officers' Benefits (PSOB), enhanced multiplier formulas, and earlier normal-retirement-age provisions further differentiate plan tiers within a single sponsor. Center for Retirement Research at Boston College — Public Plans Data, 2024

Cash balance and pension equity hybrid plans occupy a middle ground between traditional DB and DC structures: participants accrue notional account balances credited with pay credits and interest credits, but the plan retains investment risk on the asset side. The Pension Protection Act of 2006 (PPA 2006) clarified hybrid-plan compliance through age-discrimination safe harbors and conversion protections, prompting several state and large municipal plans (notably Kansas, Nebraska, and Tennessee for new hires) to adopt hybrid designs. The Setting Every Community Up for Retirement Enhancement Act (SECURE Act 2019) and SECURE 2.0 Act 2022 introduced auto-enrollment, auto-escalation, and Required Minimum Distribution age changes (73 effective 2023 under SECURE 2.0 §107, transitioning to 75 in 2033) that affect DC plans more than DB plans, but reshape the broader retirement-savings landscape that public pensions sit within.

Compared with private-sector DB plans governed by ERISA Title I (labor) and Title IV (Pension Benefit Guaranty Corporation termination insurance), public pensions are explicitly exempt from ERISA under §4(b)(1) — instead operating under state constitutional protections, state pension code, and Government Accounting Standards Board (GASB) reporting standards. GASB Statement 67 (financial reporting for plans) and Statement 68 (employer reporting) require public plans to disclose net pension liability on the sponsor government's balance sheet using a single discount rate that blends expected return and high-quality municipal bond yield when assets are projected insufficient. Private-plan Pension Benefit Guaranty Corporation (PBGC) backstop is unavailable to public-plan members; instead, full-faith-and-credit pledges of the sponsoring state or municipality serve as the de facto guarantee, with severity of legal protection varying by state constitutional language (some states explicitly forbid benefit reductions, others permit prospective reform). Government Accounting Standards Board — Statements 67 and 68, 2014

Pension and ERISA reference notes

The Employee Retirement Income Security Act of 1974 (ERISA, Pub. L. 93-406) organizes private-sector retirement law across four titles: Title I (Labor — fiduciary duty under §404(a)(1) prudent-expert standard, reporting and disclosure under Form 5500, prohibited transactions under §406 with statutory exemptions in §408), Title II (Internal Revenue Code amendments — qualified plan tax treatment under §401(a)), Title III (Jurisdiction — DOL Employee Benefits Security Administration enforcement and Treasury IRS enforcement coordination), and Title IV (Plan Termination Insurance — Pension Benefit Guaranty Corporation single-employer and multiemployer programs). Public plans are exempt from ERISA per §4(b)(1) but adopt many parallel governance principles voluntarily through state code. Public Law 93-406 — Employee Retirement Income Security Act of 1974

Form 5500 is the annual report required of nearly all ERISA-covered plans, with attached schedules tailored to plan size and structure: Schedule A (insurance contract information), Schedule B (actuarial information for DB plans, replaced by Schedule MB for multiemployer and Schedule SB for single-employer post-PPA), Schedule C (service-provider compensation disclosure under 408(b)(2)), Schedule D (multi-employer plan information), Schedule G (financial transactions including non-exempt prohibited transactions), Schedule H (large-plan financial statements with Part I asset-allocation breakdown into equity, fixed income, alternatives, real estate, and cash), Schedule I (small-plan financial statements), and Schedule R (retirement plan distributions and ESOP information). Public plans typically file equivalent state-level actuarial valuations rather than Form 5500.

Defined benefit (DB) plans encompass single-employer pensions sponsored by one company, multi-employer plans jointly trusteed under collective bargaining agreements (Taft-Hartley plans), and multiple-employer plans operated by professional employer organizations or association sponsors. Defined contribution (DC) plans include 401(k), 403(b) for nonprofit and educational employers, 457 deferred compensation for state and local government workers, 401(a) money-purchase and profit-sharing plans, ESOPs (Employee Stock Ownership Plans), and target-benefit plans. Since the Pension Protection Act of 2006, automatic-enrollment and automatic-escalation features became the dominant 401(k) design pattern, with the SECURE Act 2019 expanding eligibility for long-term part-time workers and the SECURE 2.0 Act 2022 introducing emergency savings sidecars, student-loan-matching contributions, and the Saver's Match. Internal Revenue Code §§401(a), 401(k), 403(b), 457

Internal Revenue Code §415(b) caps the annual benefit payable from a DB plan at the lesser of 100 percent of the participant's high-three average compensation or a statutory dollar limit (in 2024, $275,000), while §415(c) caps DC annual additions at the lesser of 100 percent of compensation or another statutory dollar limit (in 2024, $69,000 including employer contributions plus catch-up). The §402(g) elective-deferral limit governs employee 401(k) and 403(b) salary deferrals (in 2024, $23,000 base plus $7,500 catch-up at age 50, with the SECURE 2.0 Act adding a super-catch-up of $11,250 for participants ages 60 through 63 starting in 2025). Compensation eligible for plan purposes is itself capped under §401(a)(17) at $345,000 in 2024.

Nondiscrimination testing is the cornerstone of qualified-plan compliance: the Actual Deferral Percentage (ADP) test and Actual Contribution Percentage (ACP) test compare highly compensated employee participation against non-highly compensated employee participation in 401(k) deferrals and matching, with corrective distributions of excess contributions required if a plan fails. The Top-Heavy test under §416 requires minimum benefits or contributions for non-key employees when key employees hold more than 60 percent of plan assets. The §401(a)(4) general nondiscrimination test verifies that benefits or contributions do not discriminate in favor of highly compensated employees, with safe-harbor design (Safe Harbor 401(k) under §401(k)(12) or Qualified Automatic Contribution Arrangement QACA under §401(k)(13)) eliminating ADP/ACP testing in exchange for matching or nonelective contribution commitments. The §410(b) coverage test ensures the plan benefits a sufficient percentage of non-highly compensated employees relative to highly compensated employees. Treasury Regulation §1.401(a)(4) — General Nondiscrimination Rules

Roth 401(k) contributions, after-tax contributions, and the mega-backdoor-Roth strategy enable participants to direct after-tax dollars into qualified plans for tax-free growth. In-service distributions before separation from service are permitted only in narrow circumstances (age 59½ for elective deferrals, age 62 for DB pension benefits under PPA 2006), while hardship withdrawals under §401(k) safe-harbor reasons (medical expenses, primary-residence purchase, post-secondary tuition, eviction or foreclosure prevention, funeral expenses, casualty loss, federally declared disaster, terminal illness under SECURE 2.0) require demonstration of immediate and heavy financial need. Qualified plan loans up to the lesser of $50,000 or 50 percent of vested balance under §72(p) avoid taxable-distribution treatment if repaid on schedule.

Required Minimum Distributions (RMDs) under §401(a)(9) begin at age 73 for participants born 1951-1959 (per SECURE 2.0 §107) and shift to age 75 for those born in 1960 or later effective 2033. The Uniform Lifetime Table calculates the RMD as account balance divided by the life-expectancy factor for the participant's age; the joint-and-last-survivor table applies when the sole beneficiary is a spouse more than ten years younger. RMDs from Roth 401(k) accounts were eliminated by SECURE 2.0 §325 effective 2024, harmonizing them with Roth IRAs. The qualified default investment alternative (QDIA) safe harbor under DOL Reg. §2550.404c-5 protects fiduciaries who default participants who fail to make affirmative investment elections into target-date funds, balanced funds, or managed accounts.

Fiduciary duty under ERISA §404(a)(1) requires plan fiduciaries to act solely in the interest of participants and beneficiaries, with the prudent-expert standard demanding the care, skill, prudence, and diligence that a prudent person familiar with such matters would exercise — a higher bar than the common-law prudent-investor standard. Plan fiduciaries include the named plan administrator under §3(16), trustees under §403, investment managers under §3(38) (registered investment advisers, banks, or qualified insurance companies who acknowledge fiduciary status in writing and gain ERISA §405(d) liability allocation), and §3(21) investment advisors who provide investment recommendations. The 408(b)(2) service-provider fee disclosure rule mandates written disclosure of direct and indirect compensation, while 404(c) participant-directed-investment safe harbor relieves fiduciaries from individual investment-decision liability when participants control their own accounts and receive prescribed disclosures. ERISA §404(a)(1) — Fiduciary Duties

Prohibited transactions under ERISA §406 forbid sales, exchanges, leases, loans, or services between a plan and a party in interest (including the sponsor, fiduciaries, and affiliates), with statutory exemptions in §408 for routine plan operations such as participant loans (§408(b)(1)), reasonable arrangements with service providers (§408(b)(2)), and the QPAM (Qualified Professional Asset Manager) class exemption PTE 84-14 that allows transactions between a plan and a party in interest when an unrelated qualified asset manager directs them. PTE 2020-02 (the DOL fiduciary investment-advice rule) was vacated by the Fifth Circuit in 2024, leaving the 1975 five-part test and the SEC Regulation Best Interest framework as the operative standards for retirement-account investment recommendations.

The Pension Benefit Guaranty Corporation (PBGC) operates two federal insurance programs for private DB plans: the single-employer program (covering approximately 23 million participants in 24,000 plans) charges a per-participant flat-rate premium plus a variable-rate premium based on unfunded vested benefits, with a Risk-Based Premium structure introduced under MAP-21 (Moving Ahead for Progress in the 21st Century Act). The multiemployer program covers approximately 11 million participants in 1,400 collectively-bargained plans and historically faced insolvency until the Multiemployer Pension Reform Act 2014 (MPRA) authorized benefit suspensions in critical-and-declining plans, followed by the American Rescue Plan Act 2021 §9704 Special Financial Assistance (SFA) program providing up to $86 billion in PBGC grants to keep insolvent multiemployer plans solvent through 2051. Plan terminations occur in three forms: standard termination (sufficient assets), distress termination (sponsor financial inability), and involuntary termination initiated by PBGC. Public pension plans receive no PBGC backstop. PBGC Annual Report — Pension Benefit Guaranty Corporation, 2024

Defined-benefit plan funding rules under PPA 2006 require minimum contributions that gradually amortize unfunded liabilities, with benefit restrictions imposed when the Adjusted Funding Target Attainment Percentage (AFTAP) falls below 80 percent (limits on accelerated benefit payments and amendments increasing benefits) or below 60 percent (suspension of future benefit accruals). The MAP-21, HATFA (Highway and Transportation Funding Act 2014), and BBA 2015 (Bipartisan Budget Act 2015) introduced segment-rate stabilization that smoothed corporate-bond-rate movements through a 25-year average corridor — controversial because it artificially reduced contribution requirements while increasing PBGC variable-rate premium revenue. Liability-driven investing (LDI) and asset-liability matching (ALM) frameworks aim to immunize the funded ratio against interest-rate movements by aligning fixed-income duration with liability duration, while glide-path target-date fund design progressively de-risks participant accounts as the target retirement date approaches.

For more on how PlainPension extracts these data points from upstream Public Plans Database releases, see our methodology page. Plan-level rankings, state aggregates, and the underlying historical funded-ratio series are accessible from each plan profile, and corrections can be flagged through the contact form for review in the next refresh cycle.