Report: Iowa state pensions among the nation’s best-funded

By: - September 14, 2021 2:31 pm

The Iowa State Capitol. (Photo by Perry Beeman/Iowa Capital Dispatch)

Iowa’s state government pension funds are among the best-funded in the nation even as other states have improved their position, a new Pew Charitable Trusts analysis shows. 

Pew found that nationally, state retirement systems are in the best shape they’ve achieved since the Great Recession of 2007-09. As a group, U.S. state retirement systems together are more than 80% funded for the first time since 2008.  

The report was based on 2019 figures. Iowa’s pension funds were 85.4% funded, according to Pew. That compares with South Dakota at 110.1%; Nebraska, 93.1%; Minnesota, 82.2%; Missouri, 77.8%; Kansas, 69.9%; North Dakota, 69.8%; and Illinois, 38.9%.

Pew reports Iowa had a net asset position of $34.8 billion, with liabilities of $40.7 billion. 

Funding gap narrows

Pew noted that many thought the gap between state pension obligations and cash on hand would widen. But a combination of higher contributions by employees — a 10-year trend — and most states’ whittling of benefits combined to strengthen the funds’ financial positions. 

“Pew research shows that contributions have increased an average of 8% each year over the past decade, boosting assets and paying down debt,” Pew wrote. “In the four states with the most financially troubled pension systems — Illinois, Kentucky, Pennsylvania, and New Jersey — contributions increased by an average of 16% a year over the same period.”

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Perry Beeman
Perry Beeman

Perry Beeman has nearly 40 years of experience in Iowa journalism and has won national awards for environmental and business writing. He has written for The Des Moines Register and the Business Record, where he also served as managing editor. He also is former editorial director of Grinnell College. He co-authored the recently published book, "The $80 Billion Gamble," which details the lottery-rigging case of Eddie Tipton.