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Justin Fox

Wisconsin's Pension System Works for Everyone

State employees and taxpayers share the risks of financing retirement. The result is a pension fund that underpromises and overdelivers.

That seems nice ...

That seems nice ...

Photographer: Justin Sullivan/Getty Images

The latest Pew Charitable Trusts report on the state pension funding gap, which came out last month, has many words of warning for states that are “on an unsustainable course, coming up short on their investment targets and having failed to set aside enough money to fund the pension promises made to public employees.” New Jersey is in the worst shape of all, with pension fund assets that in 2016 added up to only 31 percent of liabilities. Colorado, Connecticut, Illinois and Kentucky all had funding ratios of less than 50 percent; 17 other states had assets less than two-thirds of liabilities.

Less attention is paid to the states that don’t have looming pension crises. Maybe that’s a mistake. Surely we could learn from, say, Wisconsin, the state with the best-funded retirement system. What does it do so differently?