U.S. States Are Short 27% of $2.7 Trillion Owed Retirees, Pew Report Says

[Purveyor]

Source: Bloomberg News

Dec. 18 (Bloomberg) -- U.S. states are short almost 27 percent of the estimated $2.73 trillion in pension and benefit payments owed to retired workers over the next 30 years.

States, on the hook for an estimated $2.35 trillion in pension payments and $381 billion for retiree benefits including health care, are underfunded by $731 billion, the Pew Center on the States said in a report released today. While states have set aside $2 trillion for pension payments, only $11 billion is available for benefits.

``It is really a situation where states have been making promises that they have to pay for tomorrow and not putting the money aside today,'' Susan Urahn, the center's managing director, said in an interview. The center, a part of the Pew Charitable Trusts, reviews state policies and works to promote nonpartisan solutions, according to information on its Web site.

The report attempts to estimate the costs of anticipated benefits and consequences states will face if action isn't taken. States are among government entities with annual revenue of at least $100 million that must provide estimates of their non-pension retiree benefit costs in their 2008 financial reports. The reporting requirements were established by the Government Accounting Standards Board in 2004.



Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=asqbH2exIjQE&refer=us

[librechik]

1. ouch

that's gonna hurt...we're talking billions and billions

[Robbien]

2. States keep borrowing money from employee pension funds

It is not so much a matter of putting aside money, many States raid their pension funds cash.

The same way the Feds raid SS's cash.

[aquart]

3. Shit.

Me, I would make borrowing from a pension fund a hanging offense, but that's just little me.

[flashl]

4. Bad news ...

And, Pension Benefit Guaranty Corporation (or PBGC) an independent agency of the United States government is near broke.

[jody]

5. Source study by Pew Trust shows the bigger states are well funded, FL 106% , NY 100%, TX 89%, CA 87%

STATE PENSIONS: FUNDING LEVELS, 2006 (page 18)

[flashl]

9. Florida's financial status is 'iffy'

Florida is undergoing audits

If all is safe in the world of pensions then why is this effort underway to Supersized SIV?

`SuperSIV' Fund to Start Buying in Weeks

(Bloomberg) -- The ``SuperSIV'' fund, set up to provide cash to structured investment vehicles hurt by the collapse of the subprime-mortgage market, plans to start buying assets ``within weeks,'' its sponsors said today.

The fund's size, originally envisioned at about $80 billion, will be based on ``SIVs' needs and evolving market circumstances,'' Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and BlackRock Inc. said in an e-mailed statement. The banks are raising money for the fund while BlackRock will manage its assets.

[ryanus]

6. "unfunded liabilities"

it'll get worse too. Part of the problem is that there's no way to no for sure what the total liabilities will be. Like, how much will you have to pay in Medicaid or Social Security in 10 years? Depends on how many people live long enough to qualify, as well as what costs will be.

[Yupster]

7. Some cities and even small towns are in even worse shape

There was some story about a little city where in 10-20 years their entire city budget will be needed just to fund police and firemen's pensions and health insurance.

The problem is that no one will confront the problem because it won't come due while they are the mayor.

[Jersey Ginny]

8. I think it is time to phase out the pension system

I'd prefer a 401K plan that people can take with them if they move jobs. I've worked around a lot of govt employees who are miserable in their jobs but just stay to get their pensions. That's no way to live, IMO. Also, govt and industry has been irresponsible with the pension funds. Geez, I know this sounds Republican, but workers in government and industry with pensions are starting to get screwed.

[flashl]

10. Have you read this?

401K Myth