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State public retirement funds $50 billion short - Health care liability is only 1.9% funded [View All]

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Bozita Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Feb-18-10 01:14 PM
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State public retirement funds $50 billion short - Health care liability is only 1.9% funded
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POSTED: FEB. 18, 2010
State public retirement funds $50 billion short
Health care liability is only 1.9% funded

Michigan taxpayers are on the hook for more than $50 billion in unfunded pension and retiree health care for future public sector retirees, according to a new report on state retirement systems from the Pew Center on the States.

On the bright side, it's worse elsewhere. Californians have a $122-billion shortfall. Illinois, with the most underfunded pension system, is about $94 billion in the hole.

The calculations are based on state-by-state analysis of the cost of future benefits and the retirement systems' projected capacity to cover them.

Michigan's pension systems, which include state employees and school teachers, have $70.4 billion in anticipated payouts to current and future retirees.

About $11.5 billion of that is unfunded, according to Pew. Michigan's pension funds actually compare favorably to most other states, funded at an 84% level, above the national average and the 80% level recommended by experts, Pew said.

The picture for retiree health care is bleaker. Pew pegs Michigan's liability for health care and other non-pension benefits (such as life insurance) at $40.7 billion, with only a small fraction (1.9%) currently funded. Only California, New York, New Jersey and Illinois have larger gaps.

In most states, public pension benefits are legally sacrosanct; in Michigan, they enjoy constitutional protection. And a failure to reduce costs or save more in the interim "could lead to higher taxes," Huh said.


Here's the Pew fact sheet on Michigan:

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