For more than 15 years, Florida’s pension system has been drifting toward financial trouble, and a new pension report underscores the problem. Year after year, state officials have insisted that the system is stable, relying on strong investment returns and ever-increasing taxpayer contributions to keep it afloat. But as more retirees collect benefits and fewer workers pay in, the cracks in the system are becoming harder to ignore.

Now, in 2025, state officials are once again pointing to a small boost in the system’s funding ratio—from 82.4% to 83.7%—as proof that things are improving. But that’s like celebrating a high tide while ignoring the fact that the ship is still drifting toward the rocks. The underlying problems remain unresolved, and unless lawmakers make meaningful structural reforms, the Florida Retirement System (FRS) is on a slow-motion collision course with reality.

This year’s “improvement” in the pension fund wasn’t the result of smart fiscal management or meaningful changes. It came because taxpayers have been forced to throw more of their own money overboard to keep the ship from sinking. Employer (taxpayer) contributions soared 15.6% in just one year, jumping from $5.58 billion to $6.5 billion. Meanwhile, state employees—the ones actually receiving the pension benefits—contributed just $923 million, barely more than the $904 million they put in last year. Yet even with more money flowing into the system, liabilities have continued to grow, increasing from $3.49 billion to $6.06 billion in a single year. Despite the short-term boost, the system remains tens of billions of dollars short of what it needs to fully cover future obligations. It’s not staying afloat because it’s structurally sound. It’s staying afloat because taxpayers are bailing water as fast as they can.

One of the biggest issues facing FRS is that it’s running on an outdated model that no longer works. There was a time when the system had enough active employees to support its retirees, but today, the workforce has shrunk while retiree rolls continue to grow. The latest figures show that 459,428 retirees are collecting benefits, while only 659,333 active employees are paying in—a dangerously low 1.4-to-1 worker-to-retiree ratio. That ratio will only continue to decline as more public employees retire and younger workers opt for the state’s 401(k)-style investment plan instead of the pension. If fewer employees are contributing to the pension system, there’s less money coming in to cover the growing number of retirees collecting benefits.

In 2024, pension payouts climbed to $12.36 billion, an increase of 0.9% over the previous year. That’s a trend that won’t reverse, and unless the system is restructured, the burden will continue shifting to Florida taxpayers. But instead of addressing the problem, state pension managers have relied on strong investment returns to paper over the system’s growing liabilities. This year’s 10.52% investment return helped prop up the system, but that’s a temporary reprieve, not a solution. Florida assumes it will earn a 6.7% investment return every year, but independent analysts have warned for years that a more realistic rate would be between 5.5% and 6%. When investment returns don’t meet expectations, the deficit grows even larger, forcing taxpayers to fill the gap.

Republican leaders have had 15 years to change course, but instead of making real structural reforms, they’ve been content to let the winds and waves of the stock market do the work. That strategy works until it doesn’t. Eventually, Florida will hit low tide—whether from a market downturn, an economic slowdown, or a budget crisis—and lawmakers will be left with three options: raise taxes to cover pension shortfalls, cut services like education, law enforcement, and infrastructure, or borrow money to plug the hole. None of those choices will be popular, and none of them will be necessary if lawmakers act now while they still have the ability to turn the wheel.

Despite the spin about one-time investment gains, Florida’s pension system isn’t getting any stronger—it’s just being lifted by temporary waves and bailed out by taxpayers. If state leaders don’t act now, they won’t be deciding how to steer the ship—they’ll be deciding how much damage control they can afford once it runs aground.