Skip to comments.Ratings Service Moody’s Finds Pension Shortfall
Posted on 06/29/2013 4:28:57 AM PDT by SeekAndFind
Moodys Investors Service, dissatisfied with the way states measure what they owe their retirees, released its own numbers on Thursday, showing that the 50 states have, in aggregate, just 48 cents for every dollar in pensions they have promised.
That is much less than the 74 cents on the dollar that the states now report, suggesting the states are short by about $980 billion, with many local governments, like school districts, being on the hook for additional billions that they have not disclosed at all.
The disparity suggests that politically difficult steps taken recently by many states to fix their pension problems raising retirement ages, requiring bigger contributions from workers, lowering benefits for new hires will prove insufficient, because they were based on underestimates of the problem.
Moodys new method reflects a belief, held by many economists, that states and local governments are severely distorting their pension numbers by failing to take proper account of market risks. This makes public pensions look cheaper than they are turning out to be, wreaking havoc with budgets. Moodys new method does not go as far as these economists may wish. But it does eliminate some of the distortion by converting the value of future pensions into current dollars using a high-quality taxable bond rate.
(Excerpt) Read more at dealbook.nytimes.com ...
You could go to a hundred people affected by this shortfall, and ninety-eight have no concept or understanding of the meaning of ‘shortfall’. As far as they are concerned....the money will magically arrive each month.
Here is a sad piece of truth. One day ALL US Government checks will bounce... one day all pensions will fail... one day Socialist Security will fail... one day Medicare and Medicaid will fail... one day food shortages will cause anarchy, rioting and death... that day approaches.
Take a NYC cop..who today can retire on half pay after 20 years.. if he joined the NYPD at age 20, he's out today he COLA increases..and the numbers are staggering..
And Moody's study does NOT include the cost of promised medical benefits..
Here is a sad piece of truth...
I look upon that fast approaching day of reckoning with dread. It will be risky for all and painful for most. For a significant number, it will be fatal. And, it is the only thing that
will might wake up the majority.
I fear that the Left has bigger plans. That is, the Left will not let a good crisis go to waste.
The numbers are much worse for State with democrat leadership... those folks are as corrupt on the local level as the national level.