Report: Public-Sector Pension Plans Are Trillions Short

The average public pension plan is just 72% funded, racking up a collective shortfall of more than $1.6 trillion, The Economist reported Thursday.

Cities and states are paying more, but still not enough, according to the outlet.

In 2001 public-sector employers contributed 5.3% of their payroll to meet pension promises; now that figure is around 16.5% on average, the outlet reported.

Yet in no year since 2001 has the average employer contributed as much as demanded by actuaries.

America’s buoyant stockmarket has done its best to help, The Economist reported, noting returns on government bonds have also been good for much of the past three decades.

Yet despite that, the average public-sector scheme is less well funded now than it was in 2001.

According to the outlet, the markets are unlikely to keep being so helpful, noting in 1982 the government sold long-term Treasury bonds with a yield of 14.6%; now such bonds yield just 2.4%.

The Economist noted the accounts of troubled pension plans illustrates the shortfall crisis.

For example, it reported, the Chicago Teachers pension fund has a shortfall of $13.4 billion, and a funding ratio of 47.9% on the basis of an assumed return of 6.8%. Its financial report reveals a one-percentage-point fall in the discount rate would increase the deficit by $3 billion.

The Chicago Teachers scheme is aiming for 90% funding, but not until 2059 — long after many retired members will have died. New Jersey’s teachers’ pension plan is not scheduled to be fully funded until 2048, The Economist reported.

via newsmax

2 comments

  1. With this kind of shortfall, and believe me, Illinois accounts for $150,000,000,000 of it, who would vote for sanctuary handouts and medicaid for all. We can’t possibly think pof handing out additional trillions of dollars that we don’t have. Our only hope is that small businesses across America can make the profits to pay a portion. As long as small business is crippled by over taxation, our country is in worse than dire straits. Another way to pick up part of the shortfall is to eliminate all corporate welfare programs. And still the obvious and unthinkable solution is to eliminate golden retirement parachutes for all elected and appointed politicians; impose term limits; eliminate all lucrative political careers and impose mandatory pay caps and mandatory retirement ages on all politicians and appointed positions.

  2. I agree start at the top. Over paid, we pay for their private med., over paid pension. A pension for working about 10 yrs. recieving 20 times more than someone working 20 yrs. They get free med. for life.

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