Skip to comments.State retiree benefits gap grows to $1.26 trillion (not including unfunded health care)
Posted on 04/26/2011 3:07:39 AM PDT by Zakeet
States are $1.26 trillion in the hole when it comes to their pension and retiree health obligations, according to a report released Tuesday.
And taxpayers are ultimately on the hook for this shortfall, which soared 26% in one year.
The Great Recession has wreaked havoc on states' pension and retiree health systems, the Pew Center on the States found. The report covers fiscal year 2009, which began July 1, 2008 in most states.
States are largely responsible for this predicament. As tax revenues plummeted, many skipped part or all of their annual retiree benefits contributions as they struggled to pay for education, Medicaid and other services.
"Far too many states have not responsibly managed the cost of retirement benefits, effectively running up the price for taxpayers," said Susan Urahn, the Pew Center's managing director.
States only contributed a total of 64% of the nearly $115 billion their actuaries recommended they put in their pension funds for that year, the center said. They now face a $660 billion gap in these accounts.
The retiree health funding picture is even more dire. States face a total liability of $635 billion, but have set aside only $31 billion, the study showed. Two states -- Alaska and Ohio -- account for 62% of the money reserved for these benefits.
While retiree health coverage is easier to scale back than pension promises, it could pose a bigger problem in the future. That's because the burden is expected to balloon as the Baby Boomers retire and health care costs skyrocket.
Adding to states' troubles is the level of investment return they include in their pension calculations. They typically assume an average annual return of about 8%, but some experts are arguing this is too high.
(Excerpt) Read more at money.cnn.com ...
... and don't you stupid $*%#% taxpayers think about making us contribute to the cost of any of the benefits that our unions negotiated for us!
We are the new Soviet Union, a worker’s paradise for some people. Oops, we’ve run out of other people’s money. Quick, kill all the old people! D@mn, we’re still out of other people’s money? Take their savings and property! What, only good enough for one year? Kill them all again!
If governments didn’t have the power to confiscate people’s money against their will, thus thinking they’ll always have a way to pay for their promises, they might be more inclined to better manage their money.
“and don’t you stupid $*%#% taxpayers think about making us contribute to the cost of any of the benefits that our unions negotiated for us!”
It’s going to be very interesting to see what happens when the looters no longer have their confiscated benefits.
Apparently there are 31 states with less than the suggested 80% of obligations covered by funding. New York oddly enough has 101% of their present obligations covered. a continued down economy and increasing numbers of retired could very quickly skew the numbers into the negative. Present figures base the annual investment gain at somewhere around 8 percent in order to fund obligations. I think it will be some time if ever that figure will be again close to reality.
Gut feel says even four percent gain could be a mild stretch in today’s world.
I love how the time period here is mid2008 to mid2009....gee, what happened to the value of investment assets during that period?
more alarmist bs from the media.
Far from alarmist bs. The figures I quote are 2010 and indicate a serious problem for states with large public service union membership, or any state with a large group of people in their state pension system. These are obligations with the potential to bankrupt a state if the potential deficit continues to grow due to the present economy.
The meteoric rise of gold and silver prices alone much less other commodities is a sure indicator that the economy is not stable or in good shape at present.
Whatever the numbers that are in the current reserves, the reality is that the basis upon which many pubic pensions are claculated is unsustainable. Whether it is the Madoff-like 8% return rate or a pension based on a % of the highest 3 or 5 years salary plus overtime - there is no way that this can be adequately funded.
but they'll blame it on the "recession" ....