Mississippi's Pension Fund Gets 18%. It Needs 26%.
Summary
Mississippi's Joint Legislative Committee on Performance Evaluation and Expenditure Review reports that the state's $36 billion public pension fund needed 25.98% of covered payroll contributed in fiscal 2025 to stay actuarially sound -- state law required only 17.90%, a gap PEER's own figures put at roughly $601 million for the year. Even once five years of legislated 0.5-point rate increases finish phasing in by 2029, the statutory rate still falls 6.08 points short of the actuarial one, and the fund's own projection puts it at just 63.7% funded by 2047 -- still below its own funding policy's target range. Meanwhile the ratio of working members paying in for every retiree drawing out has fallen to 1.20 to 1, down from 1.52 to 1 a decade ago, and already below the national average.
The rate the state pays is set by statute, not by the math
PERS runs on a defined-benefit model: contributions from roughly 146,000 active workers and their employers, plus investment returns, are supposed to cover benefits promised to about 122,000 retirees. Every year, an independent actuary calculates the actuarially determined contribution (ADC)⧉ -- the rate that, contributed consistently alongside expected investment earnings, would fund those promises in full over the long term. For fiscal 2025, that rate was 25.98% of payroll. But since 2024, the Legislature -- not the actuary -- has set the rate PERS actually collects. Senate Bill 3231⧉ locked in a five-year phase-in from 17.40% to 19.90%, moving 0.5 points a year; fiscal 2025's statutory rate was 17.90%.
PERS's own funding policy tracks the resulting gap as the ADC/FCR ratio -- the actuarial rate divided by the legislated one, calculated using the full 19.90% target. As of the June 30, 2025 valuation, that ratio was 130.6%, up slightly from 130.3% a year earlier, and it registers as a red-signal-light result under the policy PERS's own board adopted. Two other metrics were flagged the same way: the plan's projected funded ratio for 2047 -- 63.7%, using the current valuation -- still falls in the policy's red zone (below 65%), and cash flow as a share of assets came in at -6.2%, a yellow-status result meaning benefit payments are outrunning contributions faster than the fund's policy considers sustainable.
View data as table
| Actuarially determined (FY2025) | 26% | The rate PERS's actuary calculates is needed to fund promised benefits in full over the long term |
|---|---|---|
| Statutory rate paid (FY2025) | 17.9% | The rate actually required by law this fiscal year, under the multi-year phase-in schedule |
| Statutory rate target (FY2029) | 19.9% | Where the phase-in schedule tops out -- still 6.08 points below the actuarial rate |
The debt is scheduled to take 42 years to pay off -- against a 30-year target
PERS measures the underfunding itself as the unfunded actuarial accrued liability, or UAAL -- the gap between what the plan owes and what it has. The board's policy amortizes the UAAL balance that existed as of June 30, 2018 over a closed 30-year period. As of June 30, 2025, though, the plan's anticipated accrued liability payment period -- how long paying off the UAAL will actually take under current assumptions -- was 42 years, an improvement from 44.9 years a year earlier but still 12 years past the target. PEER attributes the improvement mostly to actuarial assumption changes rather than to the contribution increases closing the gap on their own.
The math inside a single year shows why the timeline keeps stretching. PERS's actuaries logged a roughly $48 million loss on the UAAL for fiscal 2025 -- driven mainly by the contribution deficiency itself, plus higher-than-expected salary growth and demographic losses -- that was almost entirely offset by positive investment experience the same year; a separate, additional $375.1 million UAAL gain came from a round of actuarial assumption changes. Cash in and cash out tell a similar story: the plan collected $2.17 billion in contributions in fiscal 2025 but paid out $3.71 billion in benefits, a $1.53 billion difference that investment returns and the existing $36.2 billion asset base -- up from $33.7 billion the year before, on an 11.66% return -- have to cover.
View data as table
| FY2016 Active | 155 |
|---|---|
| FY2016 Retiree | 102 |
| FY2025 Active | 146 |
| FY2025 Retiree | 122 |
Fewer people are paying in for every person drawing out
The other pressure on PERS is demographic. The ratio of active, contributing members to retirees drawing benefits has fallen from 1.52-to-1 in fiscal 2016 to 1.20-to-1 in fiscal 2025 -- a 21% decline -- as active membership has shrunk almost every year while the retiree rolls have grown. PEER's report cites the December 2025 Public Fund Survey putting the national average ratio at 1.26-to-1 as of the end of fiscal 2024: Mississippi's plan is already leaner than the typical public pension nationally, at a moment when active members and their employers still supply about 37% of PERS's revenue. A declining ratio does not by itself signal financial distress, PEER notes -- but combined with an unfunded liability, the national Public Fund Survey (as PEER cites it) says the combination is exactly the kind that can produce it.
Lawmakers have also begun changing what future employees are promised. Under House Bill 1 (2025)⧉, as amended by House Bill 4073 in 2026, anyone joining PERS on or after March 1, 2026 enters a new "Tier Five" -- a hybrid plan pairing a smaller defined-benefit component with a mandatory defined-contribution account, funded by a 9% employee contribution split 4% and 5% between the two. PEER's own analysis shows Tier Five will reduce PERS's future liabilities -- but at the cost of shifting more of the retirement-funding burden onto the newest employees, who won't retire under the same terms as the workforce paying into the system today.
- Mississippi's own actuary and its own Legislature disagree by 8.08 percentage points of payroll on what PERS needs. The actuarially determined rate was 25.98% for fiscal 2025; state law required 17.90% -- a gap PEER's underlying numbers put at roughly $601 million on the year's payroll, narrowing to a still-unclosed $452.6 million once the legislated increases finish phasing in by fiscal 2029.
- Two of PERS's three funding-policy health metrics are flagged red, one yellow -- and all three have looked this way for at least two straight valuations. The 2047 projected funded ratio (63.7%) and the ADC/FCR ratio (130.6%) are red; cash flow as a percentage of assets (-6.2%) is yellow. The plan's own board-adopted policy calls for a contribution-rate increase whenever any one metric goes red.
- The workforce paying into the system is shrinking relative to the retirees drawing from it. The active-to-retiree ratio fell from 1.52-to-1 in fiscal 2016 to 1.20-to-1 in fiscal 2025 -- already below the 1.26-to-1 national average -- even as lawmakers created a new, less generous benefit tier for anyone hired from March 2026 onward.
All figures in this piece come from PEER Report #730, the Mississippi Legislature's own oversight committee's statutorily required 2025 review of PERS's financial soundness, which in turn draws on the plan actuary CavMac's Annual Valuation Report as of June 30, 2025. The $601 million and $452.6 million contribution-gap figures are this piece's own arithmetic -- PEER reports the percentage-point gaps and the payroll total separately but does not publish a dollar figure for the gap itself; both figures hold payroll fixed at the reported fiscal 2025 level, so they approximate rather than project the true cost of full funding in later years. PEER's report notes that Tier Five's dollar savings have not yet been recalculated to reflect 2026 legislative changes at the time of this review.
Sources(1) ▾
- Mississippi Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER), 2025 Update on Financial Soundness of the Public Employees' Retirement System (PEER Report #730) (2026-06-09) — PEER's statutorily required annual review of the financial soundness of the Public Employees' Retirement System of Mississippi (PERS), drawing on the plan actuary's (CavMac) Annual Valuation Report as of June 30, 2025. Primary source for every figure in this piece: the FY2025 actuarially determined contribution (ADC) rate, the statutory employer contribution rate (FCR) and its phase-in schedule, the ADC/FCR ratio and funded-ratio signal-light results, the anticipated accrued liability (UAAL) payment period, the FY2025 UAAL gain/loss components, total covered payroll, active and retiree membership counts and their ratio over FY2016-FY2025, investment returns and manager fees, and the Tier Five plan-design description. peer.ms.gov · original document
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Mississippi's pension actuary says the state needs to contribute 25.98% of payroll to the Public Employees' Retirement System (PERS) each year to keep the plan on track to pay the benefits it has promised. State law requires 17.90% for fiscal 2025 -- rising, on a legislated schedule, to a ceiling of 19.90% by fiscal 2029. Even at that ceiling, the gap never closes: PEER, the Mississippi Legislature's own nonpartisan watchdog, reports in its 2025 financial-soundness review⧉ that the state is still funding PERS at roughly 77 cents on the actuarial dollar, a shortfall worth an estimated $601 million on this year's payroll alone.