The state pension system continues to be inadequately funded, according to a report released by the Maryland Public Policy Institute.

The report by the Rockville-based nonprofit notes that the pension system is funded at 63.5 percent — well below the industry-recommended standard of 80 percent.

State pension officials, however, dismissed the report as ideologically driven and said reforms enacted over the last two years will bring the funding up to 80 percent by 2024.

“This is really old news,” said Michael Golden, a spokesman for the Maryland State Retirement and Pension System, adding that the public policy group’s report “cherry picks statistics and pulls numbers out of the air to make the argument they want to make.”

The report, authored by Gabriel J. Michael, says the state’s pension system faces “rapidly increasing costs associated with these benefits, coupled with unpredictable … investment returns.”

The report claims that the pension system assumes “average rates of return that are too high given historical experience.”

The state pension system currently assumes a 7.75 percent rate of return. Earlier this year, the system announced that investments in the previous fiscal year resulted in a 10.6 percent return. That return was about 0.36 percent in the previous year.

Morris Segall, a senior economist for Sage Policy Group, said the Maryland Public Policy Institute findings are consistent with similar report his company issued five years ago.

“We tried to convince legislators of the need for corrective action — reducing benefits, raising employee contributions, particularly for health care, and stopping the scandal in disability awards,” Segall wrote in an email. “They Band-Aided it, and now the funding liability is larger, despite a three-year bull market in stocks. At some point, this will become as big an issue as in Illinois and California,” which are both vastly underfunded.

Golden, the pension system spokesman, called the Maryland Public Policy Institute report “an ideological screed.”

On its website, the institute calls itself nonpartisan.

“No one is saying there is no problem,” Golden said. “This [report] hardly passes as analysis. From an academic standpoint, this would get a D-minus.”

The system took a 20 percent loss in 2009 as the recession hit, Golden said.

The state pension system, however, continues to exceed its stated rate of return over time. Over the last three years, investments have returned more than 10 percent to the fund. Over 25 years, the fund has seen a return of 7.82 percent, Golden said.

Additionally, the pension system has lowered its assumed rate of return to 7.55 percent, which will be phased in over four years.

Golden said the state’s unfunded pension liability has remained relatively at the same level over the last three years. In 2011, that liability was $18.7 billion. The unfunded liability decreased to $19.6 billion in 2012 before returning to $19.7 billion as of June 30, 2013.

But over that same time, the funded percentage of the plan increased from 64.4 percent to 65.5 percent, according to Golden.

“The fact of the matter is the unfunded liability is coming down,” Golden said.

In 2011, the General Assembly approved Gov. Martin O’Malley’s plan to shore up the pension system by increasing the contributions of employees to 7 percent in order to continue to receive the benefits they had been expecting.

All newly hired employees pay the higher rate and cannot draw retirement benefits until age 60. Previous employees can start receiving benefits at 55.

Last year, the General Assembly passed a law that will phase out the method of funding the pension system that essentially created a legal requirement to underfund the pensions since 2002, according to Golden.

The state will phase out that system over 10 years beginning July 1, heading toward the 80 percent funded goal in 2024.

“The full effect of the reforms takes time to turn a large ship like this,” Golden said. “But we’re on the right trajectory.”