10 States Where the Public Pension Fight Is Fierce Many are dealing with big pension bills by reducing retirement benefits. Here's a look at 10 states that have taken steps to address unfunded pension liabilities - or the amount of money the state has to pay out but for which it has no funding in the pension pool. Unfunded liability: $100 billion in the Public Employees' Retirement System and $65 billion in the State Teachers' Retirement System. Changes: Gov. Jerry Brown last month signed legislation expected to save billions of dollars in coming years by increasing the retirement age for new employees, limiting annual pension payouts to $132,120 and requiring workers who are not contributing half of their retirement costs to pay more. San Diego this year moved its city workers to a defined contribution plan similar to a 401 (k). Court challenges: Recent pension changes in San Diego and San Jose are being challenged. A state worker's organization says it's considering a challenge to the state changes. Unfunded liability: $85 billion. Changes: The state has reduced benefits for new employees, but efforts to do so for existing employees and retirees have stalled. The changes for new employees include raising the retirement age to 67 and ending 3 percent cost of living raises, compounded annually, for their pensions. Instead, new employees qualify only for raises of 3 percent or half the inflation rate, whichever is lower. Unfunded liability: $9.2 billion. Changes: Over the past two years, the state has committed to additional funding for the pension system. It wants to give existing employees the choice of increasing the percentage of their salaries going into pensions. It's also starting a new plan for workers hired after 2014 that moves toward a 401 (k) -style plan, in which workers contribute a lump sum and are guaranteed at least 5.25 percent in interest earnings annually. Unfunded liability: $30 billion. Changes: Lawmakers suspended pension increases this year, raised the retirement age for new hires in 2008 and raised the employee contribution in 2008 from 5 percent to 6 percent of their wages. Unfunded liability: $18 billion. Changes: In recent years, lawmakers have made changes to increase the retirement age and retirement benefits for new workers, but Gov. Bobby Jindal's attempt to change benefits for existing workers failed to win legislative support. Court challenges: A plan to switch new state employees to a cash balance plan with many of the features of a 401 (k) -style account is tied up in litigation. Unfunded liability: $4.26 billion. Changes: The state cut benefits in 2009 and 2011, has raised some retirement ages and increased contributions from employees. Some lawmakers plan to push legislation to create 401 (k) -style retirement plans next year. Court challenges: Lawsuits challenging the increased member contributions and benefit changes are pending. Unfunded liability: $41.7 billion. Changes: In 2011, a law increased pension contribution requirements for public employees and suspended pension increases. Court challenge: A judge sued, saying the increased pension and health care contributions amounted to an unconstitutional salary reduction for judges. A court agreed, and now there's a call to amend the state constitution to allow the changes. Unfunded liability: $9 billion.