This pension funding ratio relates the assets in the government’s pension plans to the overall pension liability. The assets are in the numerator of the ratio, and the liabilities are in the denominator. Higher ratios indicate better funding. We express the ratios as percentages. For example, if assets are $80, and liabilities are $100, we report the funded ratio at 80 percent.
State and local governments reported assets at their "actuarial" (smoothed) value until 2014, when government accounting standards began to require reporting at market value.
You can review a more complete description of our pension methodology at this page at Data-Z.
In 2012, the American Academy of Actuaries published an interesting and valuable contribution to understanding pension funded ratios, titled “The 80% Pension Funding Standard Myth.”