(HARTFORD, CT) – Governor Ned Lamont, Treasurer Erick Russell, and Comptroller Sean Scanlon today highlighted the release of two reports detailing significant improvements made in recent years to strengthen the long-term health of Connecticut’s pension funds for retired teachers and state workers, which in turn eases pressure on the General Fund and creates long-term savings for Connecticut taxpayers.
The annual State Employees’ Retirement System (SERS) Actuarial Valuation for fiscal year 2025 shows that actuarial value assets in the fund that benefits state employees, retirees, and their families grew by more than $2.3 billion over the year due to strong investment performance and additional state contributions. The system’s unfunded liability decreased from $19.2 to $17.6 billion and the funded ratio increased from 55.2% to 59.6%.
Similarly, the Teachers’ Retirement System (TRS) Annual Valuation for fiscal year 2025, which was released earlier this month, shows that actuarial value of assets for the fund that benefits the state’s retired educators increased by more than $1.6 billion over the year. The funded ratio reached 63.7%.
“Make no doubt about it, today Connecticut’s fiscal health is the strongest it has been in decades, and that is due to the responsible budgetary decisions we’ve been making over these last several years to fully fund the state’s pension obligations and make the tough choices that should have been made generations ago,” Governor Lamont said. “Financial stability means that we can better plan for the future, create the predictability that businesses seek when they are deciding where to expand and grow jobs, support essential services for our most vulnerable, and make our state a place where families want to live and thrive. I remain committed to keeping Connecticut on this path that maintains this stability for the long term.”
“Connecticut continues to make undeniable progress in strengthening its pension funds and restoring long-term fiscal stability,” Treasurer Russell said. “With a 10.14% investment return in fiscal year 2025 and nearly $1.5 billion deposited into the pension systems through our volatility cap and surplus mechanisms, we are growing assets, reducing debt, and protecting the retirement security of teachers and state employees. In close coordination with Governor Lamont and legislative leaders, we’ve accomplished this while also building additional reserves to help guard against the unpredictability of our federal government and ensure the continuation of essential services and programs for Connecticut families and children most in need.”
“Thanks to fiscal responsibility, Connecticut has now contributed $10 billion in extra pension payments since 2021 that reduce our debt and save taxpayer dollars,” Comptroller Scanlon said. “Continuing this historic progress after decades of neglect is critical to bringing our overall costs down, and it frees up future funds, empowering us to prepare for and address today’s demands. It is important that we continue to find the balance between maintaining Connecticut’s fiscal health and responding to residents’ needs. I am proud of the progress we’ve made and look forward to continuing to work with this administration.”
Additional contributions made to pension funds in recent years
The improved funded ratios are the result of a combination of factors, including strong fiscal discipline, additional contributions from excess revenue and surplus funds, and strong investment performance in recent years. Over the past decade, reforms and adjustments were put in place to lower the assumed rate of investment returns, level long-term payment schedules, and direct certain revenues to alleviate debt in the pension funds.
Budgetary controls implemented in 2017 (commonly referred to as “fiscal guardrails”), direct the state to capture certain volatile revenues and deposit them in the Budget Reserve Fund (commonly known as the “Rainy Day Fund”), along with any year-end budget surplus. When that fund reaches its legal maximum, the excess is used to pay down pension debt. These additional contributions toward pension funds in recent years have totaled more than $10 billion, including:
- $61.6 million in fiscal year 2020
- $1.6 billion in fiscal year 2021
- $4.1 billion in fiscal year 2022
- $1.9 billion in fiscal year 2023
- $933.2 million in fiscal year 2024
- $1.487 billion in fiscal year 2025
Of the $1.487 billion deposited in fiscal year 2025, Treasurer Russell directed the deposit of $894.7 million into the SERF and $592.7 million into the TRF.
According to an analysis requested by Comptroller Scanlon’s office and conducted by Cavanaugh Macdonald, an independent actuarial firm, these contributions will save taxpayers $18 billion over the next two decades through reduced annual payment obligations. Without them, this year’s state budget would require an additional $850 in pension-related funding.
Investment performance continues to surpass expectations
In September, Treasurer Russell announced that Connecticut’s pension and trust funds portfolio achieved a 10.14% investment return for fiscal year 2025, surpassing the assumed rate of return of 6.9% for the third year in a row. This follows an 11.5% return in fiscal year 2024 and an 8.5% return in fiscal year 2023, continuing a trend of strong investment results. These returns have significantly boosted assets across all funds, including record-high balances for both the teachers’ and state employees’ pension funds.
Recent budgets reversed decades of trends, making required pension contributions
For decades, Connecticut failed to make the full required annual contributions to its pension funds, leading to compounding debt. However, since 2011 the budgets adopted by the governor and legislators have fully funded these contributions annually and implemented collaborative reforms with labor and management.
Credit rating improvements
The building of reserves and paying down of pension debt have also resulted in significant improvements to the state’s credit ratings over the last seven years. The state’s General Obligation credit ratings improved to Aa2, AA-, AA and AA+ today from A1, A, A+ and AA- in 2018 for the Moody’s, S&P, Fitch and Kroll credit rating agencies. These multiple credit rating upgrades save taxpayers millions in lower borrowing costs.
View the pension reports
The pension fund actuarial valuations provide detailed membership data, actuarial analysis, and cost breakdowns.
To view the reports for the State Employees Retirement System, visit osc.ct.gov/public/retirement/retirement-systems-actuarial-reports.
To view the reports for the Teachers’ Retirement System, visit portal.ct.gov/trb/content/other-resources/statistics-and-research/actuarial-valuation.