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Unfunded pension liabilities have occurred in the past and will again occur in the future. And it is clear from an historical review that unfunded liabilities do not mean budgetary insolvency and default.
FACT: In the 1950s through 1970s, pension funding levels were the same or lower than today’s levels, without rampant municipal bond defaults or bankruptcies;
FACT: The Pew Center on States, authors of a definitive study on pension funding and a major critic of unfunded liabilities, points out that average state pension funding was at 84% in 2008, higher than the average in the 1970s, and a “relatively positive outcome, because most experts advise at least an 80 percent funding level”
FACT: Even states with some of the weakest pension funding rates, like New Jersey, had enough assets at the end of 2009 to cover their pension costs by 10 times or more.
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