Metro's soaring pension costs threaten future service, federal report says

[mahatmakanejeeves]

Transportation

Metro’s soaring pension costs threaten future service, federal report says

By Faiz Siddiqui and Robert McCartney
September 10 at 7:03 PM

Metro’s rising pension costs threaten its future operating position, potentially hampering its ability to provide service if the agency fails to rein in unfunded retirement and health-care liabilities, according to a report from the Government Accountability Office released Monday.

The 53-page report raises concerns about Metro’s nearly $3 billion in unfunded retirement and health-care costs, and notes that its $4.7 billion in total pension liabilities represents about 6.5 times what the agency spends annually on salaries and wages.

Metro’s annual pension costs grew by an average of nearly 19 percent from 2006 to 2017, the federal report said, making pensions the agency’s fastest-growing workforce cost as its total labor costs grew about 3 percent a year.

With the scale of the obligations, the report posits that in the event of an unfavorable financial market, Metro could be backed into a corner to cover its obligations. The scale of the pension liabilities means that a drop of less than one percentage point in Metro’s investment return on its pension fund could squeeze its operating budget to the point that the agency would need to reduce service or ask the jurisdictions that fund it to cover the shortfall.
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Faiz Siddiqui is a reporter with The Washington Post's transportation team. His coverage includes Metro, Uber and Lyft. Follow https://twitter.com/faizsays

Robert McCartney is The Washington Post’s senior regional correspondent, covering government and politics in the greater Washington area. Follow https://twitter.com/McCartneyWP

[PoindexterOglethorpe]

1. Not bothering to fund pensions

is a time-honored tradition in both the public and private sector, alas.

Pensions are being cut in so many places, completely devastating people who did exactly what they were supposed to: worked at the same job for twenty or thirty years or more, who were promised a decent pension and often retirement health benefits.

People trash 401k plans and the like, but it you put the money aside, and invest in a diversified portfolio, you'll probably wind up better off than with a pension that suddenly disappears or is cut by two-thirds or more.

[MichMan]

2. Time to start raising fares substantially