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State and Local Government Contributions to Statewide Pension Plans: FY 24

Introduction

Pension benefits for employees of state and local governments are paid from trust funds to which public employers and employees contribute during employees’ working years. While employees contribute with every paycheck at required statutory rates, timely and full employer contributions also are vital both to adequate funding and to the sustainability of these plans: failing to pay required contributions results in higher future costs due to foregone principal and investment earnings that the contributions would have generated. 

According to the US Census Bureau, on a national basis, contributions made by employers—states and local governments—in 2024 accounted for 76 percent of all contributions received by public pension plans. The remaining contributions were paid by employees.  A 2025 NASRA issue brief finds that contributions made by state and local governments to pension trust funds in recent years account for 5.1 percent of all non-federal spending.

Funding a pension plan takes place over many years and, as described within this issue brief, typically involves a combination of contributions from employees and employers, which are invested to generate investment earnings. The amount of contributions needed to fund a pension plan is calculated as part of an actuarial valuation, a mathematical process that determines a pension plan’s condition and the cost needed to pay promised benefits. As shown in Figure A, contributions are a vital source of public pension funding: of the $10+ trillion in public pension revenue received during the 30-year period since 1995, 41 percent, or more than $4.3 trillion, came from contributions paid by employers and employees.  Contributions, of course, provide the basis for investment earnings, which are responsible for the majority of revenue – 59 percent for the same 30-year period – received by public pension funds.  
 

Date  Published

January 2026

Contact

Keith Brainard, Research Director
Alex Brown, Research Manager

Download Issue Brief


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What's New at NASRA: Government Spending Issue Brief

NASRA’s March 2026 update on government spending makes a basic but important point: public pension benefits are not paid out of a government’s day-to-day operating budget. They are paid from trust funds that employees and employers contribute to during an employee’s working years. Those trusts distribute more than $400 billion each year to retirees and beneficiaries in communities across the country. On a national basis, employer contributions to pension trusts in FY 2023 equaled 5.16 percent of direct general spending by state and local governments, which shows that pension contributions remain a limited share of overall public spending even though the level varies from one state to another. 
The brief also shows that pension costs should be viewed in the context of the changes governments have made over the past 15 years to strengthen plan funding. Following the 2008–09 market decline, nearly every state and many local governments adjusted contributions, benefits, or both to improve pension sustainability. More recent data show that employer contributions increased from FY 2022 to FY 2023, but pension spending as a share of total government spending remained broadly stable. The updated brief provides FY 2023 figures and also projects the aggregate pension spending rate for FY 2024, offering a useful snapshot of both current costs and the longer funding trend.