24/7WallStreet: Public Pensions Face $1 Trillion Shortfall

[marmar]

Public Pensions Face $1 Trillion Shortfall
Posted: February 18, 2010 at 5:04 am


US states face a $1 trillion shortfall in the funding of their pensions, and the figure could grow substantially in the near future. The Pew Center On The States reports that ”the gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.” The research group says that if these pension are to be funded, the money will have to be taken from education, public safety, and other essential government programs. That is, if they can be funded at all.

At present, the most severe problems with pensions funding are in Connecticut, Illinois, Kansas, Rhode Island, Massachusetts, Kentucky, Oklahoma, and West Virginia. But according to some experts the problem is bound to become much larger. Orin Kramer, chairman of New Jersey’s investment council, told the Financial Times that funding gaps could be three times the Pew estimates.

The states may not be able to fund these liabilities at all. Tax receipts have been undermined by the recession. Costs in most states have gone up and some of that is due to pension obligations. Several are teetering on the brink of insolvency, including the largest state by population, California. Large Midwestern states have lost much of their manufacturing bases and with them tax receipts. The same states have chronic unemployment that could stay above 10% for years as workers try to find jobs other than the ones that they had in factories.

The Pew data means that eventually state workers and retirees may have to do with less. Similar to Americans employed in the private sector who have seen some of their retirement nest eggs which have shrunk because of the market downturn, state workers may be faced with the prospect of having to work longer and in jobs outside the ones that the state provided them. Just two years ago, it was unimaginable that a state could renege on an obligation to pay retirement and medical benefits, but falling tax income will probably change that.

State retirees are likely to find themselves in the position of many other older American. They will be short the money they thought they would have for their golden years.

-- Douglas A. McIntyre


http://247wallst.com/2010/02/18/public-peniosn-face-1-trillion-shortfall/

[Jackpine Radical]

1. Oh, big fucken deal.

At least the banksters are getting their bonuses (boni?).

[DJ13]

2. The pensioners were defrauded

Those pension programs who were talked into investing retirement funds into supposedly "safe" investment funds (comprised of fraudulent securities bundled together and rated "AAA" by Moody's) by the Wall Street bankers need to be filing lawsuits against those bankers and Moody's to recover funds for their retirees.

If they dont they will have to be considered complicit in the fraud.

[Peregrine Took]

3. State employee pensions are protected by the U.S. constitiution. n/t

[jody]

4. An interesting perspective of Dem-Rep collusion in CA is Steven Greenhut's book "Plunder!

How Public Employee Unions Are Raiding Treasuries Controlling Our Lives and Bankrupting the Nation".

[yurbud]

5. or we could raise taxes on the rich who raided those pension funds...