One of Pennsylvania's two largest pension funds has released its financial report for 2016.

The State Employees Retirement System — or SERS — continued a longstanding pattern last year of coming up short of projected long-term earnings.

It brought in $1.6 billion 2016, a 6.5 percent return, said spokeswoman Pamela Hile.

"When talking about an underfunded pension system, that is very good news," she said.

But it's still less than the rate of return SERS assumes for its investments — 7.25 percent. It's important to meet that number on average; otherwise, liabilities can't be correctly calculated, which can allow chronic under-funding.

Richard Dreyfuss, an actuary who closely tracks Pennsylvania's pension systems, said he thinks the returns SERS is expecting are too high.

"I think we're in for some difficult times ahead, candidly, just because of our mounting fiscal deficits, plus the prospect of increasing interest rates," he said. "So I think it's going to be hard to earn 7.25 percent under any scenario."

The report shows the SERS asset-to-liability ratio is just over 58 percent.

"It's not a healthy sign," Dreyfuss said. "It's certainly not where we should be or want to be."

Generally, pension plans are considered healthy at an 80 percent ratio.

Altogether, Pennsylvania's pension system has roughly $70 billion in unfunded overhead costs.