http://www.msn.com/en-us/money/marke...7Ia?ocid=ientp
Some highlights from the article:
There is a simple reason why pensions are in such rough shape: The amount owed to retirees is accelerating faster than assets on hand to pay those future obligations. Liabilities of major U.S. public pensions are up 64% since 2007 while assets are up 30%, according to the most recent data from Boston College’s Center for Retirement Research.
Here is how it got that way:
Public pension funds have to pay benefits—their liabilities. They hold assets, which grow or shrink through a combination of investment gains or losses and contributions from employers and workers. Those assets generally rose faster than liabilities for five decades starting in the 1950s because government was expanding and the number of retirees was smaller.
In the 1980s and 1990s, double-digit stock and bond returns convinced governments they could afford widespread benefit increases.
There have been efforts to address the problem. But as the article says, it hasn't been easy:
Many states and cities reduced benefits for new employees after 2008. But deeper cuts often met resistance from judges, unions and angry constituents—even in some of the most indebted states.
The Illinois Supreme Court in 2015 threw out cuts by the legislature that were expected to save tens of billions of dollars. Kentucky’s legislature last year declined to approve the governor’s proposed cuts to cost-of-living increases for retired teachers after protests brought thousands to the state capitol and forced cancellations of classes in several school districts.
My conclusion after reading all this? For years the entire public/government pension system has been far too generous.
Like allowing people to retire at 55. Or even earlier.
Thoughts? Opinions?
Public pensions systems still "in trouble"
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