Pension Shortfalls Expand

The assets of state pension funds fell last year as their commitments to pay retiree benefits rose, widening the funds’ collective shortfall to $366 billion, Wilshire Associates said in a report Monday.

California’s pension fund shortfall stood at $25.6 billion, the investment consulting firm said. By comparison, the state’s annual budget totals $99.1 billion.

Pension assets nationwide fell $77 billion, or 4%, to $1.7 trillion for the 123 funds in the study and liabilities rose 6% to $2.07 trillion, Wilshire said. As a result, funding of state pensions fell to 82% of expected liabilities from 91% at the end of 2002.

“That’s a lot less than the 115% funding level state pension plans were at when the bull market peaked in 2000,” said Steve Foresti, managing director and coauthor of the study.

Wilshire said the shortfall should close in future years because stock market increases would show up in future studies.

Florida and North Carolina were the only states where pension fund assets exceeded liabilities. California’s pension shortfall was outpaced by Illinois, at $43.1 billion; Ohio, at $29.7 billion; and New York, at $28.3 billion.