CT deposits $1.3B in pension funds

The state has deposited $1.3 billion in excess revenue into its two major pension funds, marking the seventh consecutive year it has made supplemental contributions toward its long-term retirement debt. State Treasurer Erick Russell said Tuesday that the money was generated through the state’s volatility cap and has been transferred to pension funds for state employees and retired teachers following certification of fiscal 2026 revenue data. Of the total, $685.1 million was deposited into the State Employees Retirement System, while $618.9 million went to the Teachers Retirement System. The money was divided based on each pension system’s share of the state’s outstanding unfunded pension liability, resulting in a roughly 53%-47% split. Another estimated $114 million is expected to be deposited into the two pension funds later this year after the state certifies its fiscal 2026 operating surplus. That would bring supplemental pension contributions for the fiscal year to about $1.42 billion, including approximately $745 million for the state employee system and $673 million for the teachers system. Connecticut’s fiscal guardrails, adopted in 2017, divert revenue above certain thresholds from volatile tax sources into the state’s Budget Reserve Fund, commonly known as the rainy day fund. The reserve fund has reached its statutory ceiling of 18% of net General Fund appropriations. As a result, excess volatility revenue is directed toward paying down state debt, including unfunded pension liabilities. Year-end budget surpluses are handled through the same process. Connecticut has made more than $11 billion in supplemental pension contributions over the past seven fiscal years, the Treasurer’s Office said. The largest contribution came in fiscal 2022, when the state deposited $4.1 billion. Other contributions included $1.8 billion in fiscal 2023, $933.2 million in fiscal 2024 and $1.5 billion in fiscal 2025.