Georgia Named One of Top Five Best States for Pension Funds

Georgia Named One of Top Five Best States for Pension Funds

ATLANTA – Standard & Poor's Corporation (S&P) announced last week that Georgia is among the five best states in the nation for state funded pension programs.  Georgia has a state funded pension ratio of 101 percent and is one of only three states with a fully funded public employer pension programs.  Georgia ranked third behind only Florida and North Carolina .   New York and South Dakota were also in the top five. 

“I am proud of Georgia 's high pension fund ratio,” said Governor Sonny Perdue, “It is important for Georgia citizens to prepare for retirement and this reflects highly on our ability to effectively manage the state's pension fund.”

According to the S&P analysis, this announcement comes at a time when most states' public employer pension plans are greatly under-funded.  In 2004 state pension plans fell short by $284 billion nationwide, leading to higher borrowing costs for some state governments and resulting in the under-funding of state programs.  

The status of an employer's pension plan is an important factor in determining states' future economic vitality. S&P and other rating firms recommend states take action to raise their funded pension ratios to at least 90 percent.  Under-funded public-employee pension plans contribute to steep debt levels resulting from budgetary pressures such as rising Medicaid costs. S&P urges an increase in state funded pensions because it would allow states to decrease their contribution rates and give them the financial ability to make debt payments.

State funded pension data collected for the S&P report are from 2004, the last year complete data is available.  The state funded ratio is the value of assets divided by the accrued liabilities and the plan is designed to attain a ratio of 100 percent, or a fully funded state pension program.  Pension data are combined for the principal, state-sponsored, defined benefit pension funds.  This is generally comprised of public employees' retirement system, including state and local employees, and the teacher retirement system. 

Georgia's Employee Retirement System began administering retirement benefits for state employees on January 1, 1950 .  As of June 2005, there were approximately 740,000 former and current state employees enrolled in the state funded pension plan.  More information about the Employees' Retirement System of Georgia can be found at www.ersga.org .

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