Pension Crisis: As the media relentlessly focus on the federal government's burgeoning debt, a new report says that states face their own ticking debt bomb: the exploding liabilities for lavish state and local public-employee pensions.
As Reason blogger Eric Boehm notes, "The really scary part is that pension debt keeps increasing despite the fact that taxpayers' contributions to state-level pension plans have doubled as a share of state revenue in the past decade."
Worse still, as performance lags expectations, desperate pension fund managers have gone in for increasingly risky investments - meaning that workers' pensions might not be as safe as they think.
The Pew report is blunt: "Many state retirement systems are on an unsustainable course, coming up short on their investment targets and having failed to set aside enough money to fund the pension promises made to public employees."
All told, pension-fund debt surged $295 billion from 2015 to 2016, with states having just $2.6 trillion in assets to cover total promised pensions of more than $4 trillion.
That's because in state after state, public employee unions now call the tune, making it nearly impossible to adjust spending, downsize workforces or renegotiate bad pension contracts.
Now these voters are finding out that their neglect hasn't been so benign, and that many state and local pension funds are, in effect, bankrupt.
https://www.investors.com/politics/editorials/bankrupt-public-employee-pensions-the-next-big-financial-crisis/
As Reason blogger Eric Boehm notes, "The really scary part is that pension debt keeps increasing despite the fact that taxpayers' contributions to state-level pension plans have doubled as a share of state revenue in the past decade."
Worse still, as performance lags expectations, desperate pension fund managers have gone in for increasingly risky investments - meaning that workers' pensions might not be as safe as they think.
The Pew report is blunt: "Many state retirement systems are on an unsustainable course, coming up short on their investment targets and having failed to set aside enough money to fund the pension promises made to public employees."
All told, pension-fund debt surged $295 billion from 2015 to 2016, with states having just $2.6 trillion in assets to cover total promised pensions of more than $4 trillion.
That's because in state after state, public employee unions now call the tune, making it nearly impossible to adjust spending, downsize workforces or renegotiate bad pension contracts.
Now these voters are finding out that their neglect hasn't been so benign, and that many state and local pension funds are, in effect, bankrupt.
https://www.investors.com/politics/editorials/bankrupt-public-employee-pensions-the-next-big-financial-crisis/
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