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Retirement Planning > Retirement Lists

20 Best & Worst Cities for Pension Funding

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It’s enough to drive a retirement planner crazy. Every day it seems the headlines blare some new public pension catastrophe. Detroit is the most recent example, but don’t forget about all those California cities mulling or filing for bankruptcy. And there’s Rhode Island and Illinois and … the list goes on and on.

How can retirees, prospective retirees or their advisors know just how much will be left of promised retirement benefits when politicians start pushing for cuts, and, for investors, which municipal bonds may be in trouble?

For starters, maybe the headlines don’t tell the whole story. In fact, according to a survey released in October, the vast majority of public pension funds are in better shape than those that are in trouble.

“It’s well known that a few cities, like Philadelphia, Chicago and New York, have serious pension funding problems,” said Elizabeth Kellar, president and CEO of the Center for State and Local Government Excellence. “But across the country most cities are in good shape.”

In fact, she said, while many have work to do to get their pension funds in good shape, 80% are doing just fine.

(Check out 20 Best & Worst States for Pension Funding on ThinkAdvisor.)

We decided to take a look at the municipalities whose pension funds eat up the most money (worst) and least money (best) as a percentage of tax revenues. Kellar’s center recently released a study of what percentage of municipal tax revenues are needed to keep public pensions funds in good shape.

We used that list to highlight 21 cities. Why 21? Because the liabilities of some cities were the same and that added up to 11 in the Best category and 10 in the Worst category. So here are the 21 Best & Worst Cities for Pension Funding:


Hawthorne bridge and Portland skyline.

10. Portland, Ore.

% of Revenue: 13

Population: 550,000

Portland’s pension funding problems are reflective of the state as a whole, which approved retirement benefits reforms expected to save $5 billion. Unions are fighting the changes in court, arguing they break a contract made with vested workers.

Downtown Saginaw, Michigan. (Photo: Wikimedia Commons)

9. Saginaw, Mich.

% of Revenue: 13.8

Population: 56,000

Candidates for the city council mention unfunded pension liabilities as a major problem facing Saginaw. The situation in the area is bad enough that Saginaw County wants to issue bonds to cover about $64 million of its unfunded debts.

Waterfront downtown Stockton, California. (Photo: Wikimedia Commons)

8. Stockton, Calif.

% of Revenue: 14.1

Population: 287,000

Stockton was the largest city to file for bankruptcy, in 2012, until Detroit followed suit this year. In October, Moody’s lowered the city’s credit rating from Ca to Caaa3.

Bakersfield, California.

7. Bakersfield, Calif.

% of Revenue: 14.5

Population: 316,000

As with many California cities, Bakersfield faces huge pension payments. Reform of the states system, CalPERS, was approved by the legislature last year but still faces court challenges.

Springfield, Massachusetts skyline.

6. Springfield, Mass.

% of Revenue: 15

Population: 150,000

A recent study found that for the third year in a row, Springfield’s pension fund was the worst funded in the state. Its unfunded liabilities were pegged at $652.7 million in 2012.

Reno, Nevada.

5. Reno, Nev.

% of Revenue: 15.5

Population: 215,000

Nevada’s public employee retirement system is under-funded to the tune of $11.2 billion, so it’s not a huge surprise that one of its largest cities would land in the Top 10 of worst funded pension funds.

Charleston, West Virginia skyline.

4. Charleston, W.Va.

% of Revenue: 15.7

Population: 50,000

Facing unfunded liabilities of $274 million, the city took drastic measures this summer that it hopes will allow it to avoid bankruptcy. To allow the pension fund to grow, the city decided to pay the pensions of current retirees out of its general revenue fund.

Aurora Stolp Island, Aurora, Illinois. (Photo: Wikimedia Commons)

3. Aurora, Ill.

% of Revenue: 16.4

Population: 171,000

The state and its biggest city (see No. 2 on our list) are facing major pension funding problems, but politicians, so far, have not found a way to strike a deal to fix it.

Buckingham Fountain, Chicago, Illinois.

2. Chicago

% of Revenue: 17

Population: 2.8 million

The city’s mayor, Rahm Emanuel, has sounded the alarm about the city’s pension crisis, saying the state needs to act first on its own troubles. So far, his pleas have fallen on deaf ears.

Night skyline of Little Rock, Arkansas.

1. Little Rock, Ark.

% of Revenue: 17.6

Population: 187,000

The city has instituted a new retirement plan that goes into effect in January. Beginning then, employees who retire will receive monthly benefits checks. Current retirees received a lump sum payment when they ended their city service.

Now see which cities have the lowest, or best, percentage of pension liabilities to tax revenue:


Downtown Charlotte, N.C.

10 (tie). Charlotte, N.C.

% of Revenue: 2.2

Population: 671,000

Charlotte has escaped the problem of the state. North Carolina, in a bid to increase its pension fund, is increasing its investments in real estate and private equity to try to ease an $800 billion gap in funding liabilities.

10 (tie). Greenwich, Conn.

% of Revenue: 2.2

Population: 62,000

This iconic enclave of the rich and famous on Connecticut’s Gold Coast has managed to take care of its public pension business.

 Market Street Bridge and Coolidge Park in Chattanooga, Tenn.

8 (tie). Chattanooga, Tenn.

% of Revenue: 2.1

Population: 170,000

Despite facing shortfalls in its police and fire pension funds, the health of the city’s overall retirement fund is excellent.

8 (tie). Montpelier, Vt.

% of Revenue: 2.1

Population: 7,800

While many carp at the inability of state lawmakers to deal with pension problems, the capital city’s funds are doing just fine.

Old Capitol building in Dover, Del.

7. Dover, Del.

% of Revenue: 2

Population: 36,000

Home to DuPont chemical corporation, the small city has kept abreast of payments to its public pension system.

Knoxville, Tenn., skyline and Sunsphere.

6. Knoxville, Tenn.

% of Revenue: 1.9

Population: 183,000

Skyline of Milwaukee.

4. (tie) Milwaukee

% of Revenue: 1.7

Population: 602,000

The city has consistently made its pension fund payments, something many cash-strapped municipalities failed to do when deciding where to cut budgets. Milwaukee’s 12,000 retirees can breath a sigh of relief.

4 (tie). Cheyenne, Wyo.

% of Revenue: 1.7

Population: 55,000

The city’s pension system is 92% funded. The state’s pension fund is only slightly less funded at 89%.

Deering Oaks Park in Portland, Maine.

3. Portland, Maine

% of Revenue: 1.6

Population: 63,000

Portland has been making its full pension contributions and its fund is 73%, mirroring the state’s percentage.

Capitol in Lincoln, Neb.

2. Lincoln, Neb.

% of Revenue: 1.1

Population: 248,000

Lincoln might be know for its University of Nebraska football team, but its residents can be thankful that a low percentage of the city’s revenues are used for pension obligations.

The Interstate Bridge over the Columbia River leading into Vancouver, Wash.

1. Vancouver, Wash.

% of Revenue: 1

Population: 161,000

A study by the Seattle Times suggested the state’s pension system, generally considered to be in good shape, was not in as good a shape as reported, but Vancouver still comes out as the best when compared to city revenue.

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