State pension shortfall ballooned in 2010

[Nova78]

Study: State pension shortfall ballooned in 2010 | US National Headlines | Comcast

Recession-plagued states diverted scarce money away from pensions to pay for more immediate concerns, leaving a $757 billion hole in the retirement funds covering millions of public employees, according to a study released Monday.The Pew Center on the States found 34 states failed to maintain safe levels of money in the pension funds, which most experts agree is about 80 percent of long-term obligations. Four states — Connecticut, Illinois, Kentucky and Rhode Island — didn't even have 55 percent of the money they'll need in the long run.

The total gap between the money states had available and what they'll have to pay out in the decades ahead reached $757 billion in 2010, the most recent year for which figures are available. That was up 9 percent from the year before, according to the study entitled "The Widening Gap Update."





How do you make -up 750 billion dollars,some ones going to be f@@ked on retirement day,may-be superman can come to the rescue

 

[Mad Scientist]

I have a good idea that may solve this problem! Why don't we "recapitalize" the Banks?

Oh wait, we're already doing that.

 

[Euro]

Study: State pension shortfall ballooned in 2010 | US National Headlines | Comcast

Recession-plagued states diverted scarce money away from pensions to pay for more immediate concerns, leaving a $757 billion hole in the retirement funds covering millions of public employees, according to a study released Monday.The Pew Center on the States found 34 states failed to maintain safe levels of money in the pension funds, which most experts agree is about 80 percent of long-term obligations. Four states — Connecticut, Illinois, Kentucky and Rhode Island — didn't even have 55 percent of the money they'll need in the long run.

The total gap between the money states had available and what they'll have to pay out in the decades ahead reached $757 billion in 2010, the most recent year for which figures are available. That was up 9 percent from the year before, according to the study entitled "The Widening Gap Update."

View attachment 19615

View attachment 19616

How do you make -up 750 billion dollars,some ones going to be f@@ked on retirement day,may-be superman can come to the rescue

All this pension spending is a drain and a dissaster for many countries. All the burden is put on the youth. Tax advantages that retired people has must be repealed. Then they also pay their fair share of taxes.

No wonder government are going broke with all this pension spending.

 

[KissMy]

Paving Over Pension Liabilities

Now Congress faces a June 30th deadline, having only been able to pass a 90-day funding extension at the end of March for the nation's transportation needs. As important as stable transportation spending is to the nation's crumbling infrastructure, this bill is not only about roads and bridges. Private corporations are using it as a vehicle to ask Congress to change how they calculate their annual pension contributions, which could create a huge unfunded liability for the American taxpayer.

Currently, the law requires corporate plans to measure their liabilities, and determine the annual contribution needed to fund them, by using the rate of return on corporate bonds - the discount rate. As historically low bond rates force higher contributions, corporations now want to reduce annual payments to their pension plans by lobbying Congress to change this rate. Not only is this misleading and addictive, but artificially lowering contributions today will add to future pension shortfalls tomorrow-possibly requiring further public bailouts.

The provision in the Senate-passed version of the Transportation bill currently under consideration in the House would allow corporations to use a 25-year average rate as opposed to the current 2-year average, increasing the current discount rate from the 4 percent range to roughly 6 percent. Since liabilities are sensitive to discount rate assumptions, the plan's liability will change roughly 15 percent for every one percentage point change in the discount rate. For example, Boeing reports that a mere quarter of a point increase in the discount rate could cut its pension liability by $1.7 billion. Apply a small discount rate hike across all private plans and it's easy to see why corporations are lobbying Congress for a discount rate boost.

Since 2002, Congress has, on a few occasions, let corporations use a higher discount rate to determine their contributions. Among other companies, American Airlines reduced its annual contribution to employee pension plans by $2.1 billion. Unfortunately, today the airline faces a shortfall in its pension plan, triggered by the growing expense for employee retirement. Its parent company filed for bankruptcy in November.

Corporate pension plans are insured by a federal agency, the Pension Benefit Guaranty Corporation (PBGC). If for some reason corporations are not able to pay out the pension benefits they promised to retirees, the PBGC and taxpayers are on the hook for it.

 

[GodSaveAmerica]

When it comes to balancing their budget, states have two choices: bust the public unions like Walker did in WI, or go bankrupt. Their choice, no bailouts!