“There are four key goals that Tier 2 policy options need to address,” Bunch said. “Federal compliance is a concern, as federal law requires that any non-Social Security plan must offer comparable benefits to those of Social Security. The state also needs to recruit and retain a strong workforce, provide a reasonable retirement income for employees and ensure fiscal prudence in managing its pension plans.” The state’s pension system currently faces major fiscal challenges, with $144 billion in unfunded liabilities and a funded ratio of 46 percent in fiscal 2024 — the lowest funded ratio among all 50 states.