Illinois (State of) – Pension funding improves, but lags other states due to weak contributions and high payouts

Source: Ted Hampton, Thomas Aaron, Timothy Blake, Moody’s Investors Service, Issuer Comment, State government – Illinois, December 18, 2018
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Illinois’ (Baa3 stable) pension funding slightly improved under our adjustments in the year ended June 30, 2018, despite higher unfunded liability figures that the state reported December 7 (see Exhibit 1). Rising interest rates that lowered liabilities, combined with favorable investment returns, drove down the state’s adjusted net pension liability (ANPL) by an estimated 2%-5% in the year. Nonetheless, Illinois’ recent pension funding gains lag those of other states, largely because of its weak contributions and rising payouts.