I cannot emphasize enough the social and economic risk that the trillion dollars in unfunded pension liabilities poses to the public. Not only will this growing gap lead to increased taxation, but it will crowd out educational, environmental, health, welfare and infrastructure programs. Funds that should directed towards the neediest members of our society will be consumed by public sector pensions. Truly the public sector is increasingly becoming an unsustainable force that economically and socially cannibalizes other segments of society.
The Trillion Dollar Gap: Pew Pensions and Retiree Health Benefits Report
$1 trillion. That’s the gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.
Why does it matter? Because every dollar spent to reduce the unfunded retirement liability cannot be used for education, public safety and other needs. Ultimately, taxpayers could face higher
taxes or cuts in essential public services.
A new pensions and retiree health care report from the Pew Center on the States, The Trillion Dollar Gap: Underfunded State Retirement Systems and the Road to Reform, shows why states
must take strong action now—or taxpayers will suffer later.
To a significant degree, the $1 trillion reflects states’ own policy choices and lack of discipline:
• failing to make annual payments for pension systems at the levels recommended by their own actuaries;
• expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and
• providing retiree health care without adequately funding it.
Key Findings From Pew's Pensions and Retiree Health Care Report
Retirement benefits provide a reliable source of post-employment income for government workers, and they help public employers retain qualified personnel. For states that have not been disciplined about fulfilling their obligations, the financial pressure builds each year.
• In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim.
• In eight states—Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia—more than one-third of the total pension liability was unfunded. Two states—Illinois and Kansas—had less than 60 percent of the necessary assets on hand.
• Nine states were deemed solid performers, having enough assets to cover at least 7.1 percent—the 50-state average—of their non-pension liabilities. Only two states—Alaska and Arizona—had 50 percent or more of the assets needed.
• Forty states were classified as needing improvement, having set aside less than 7.1 percent of the funds required. Twenty of these have no assets on hand to cover their obligations.
Read more about the issue, the factors driving change and the states that have promising approaches to reform. Download the full report. (Adobe PDF)
States that ignored public sector retirement challenges now face a growing bill come due—one that may have significant consequences for taxpayers. To examine the roots of the problem and how the economic crisis is spurring states into action, the Pew Center on the States held a Webinar on February 18 featuring Susan Urahn, managing director, the Pew Center on the States, and Ronald Snell, state services division director, the National Conference of State Legislatures.
Download Susan Urahn's and Ronald Snell's PowerPoint slide from the Webinar or listen to audio of the event. (MP3, 25.6 MB)
State Data
To help policy makers and the public understand the challenges states are facing, Pew assessed all 50 states on how well they are managing their public sector retirement benefit obligations.
Download the state fact sheets or use Trends to Watch to track national data and access previously unreleased data.
States’ Responses to the Pensions and Retiree Health Care Crisis
For ongoing reporting and analysis about how states are responding to the challenge of public sector retirement benefit obligations, follow the Stateline team’s coverage at stateline.org. Stateline is the independent news gathering arm of the Pew Center on the States.
Methodology
Pew’s analysis for The Trillion Dollar Gap is based on data from states’ own Comprehensive Annual Financial Reports, pension plan system annual reports and actuarial valuations. Pew researchers analyzed the funding performance of 231 state-administered pension plans and 159 state-administered retiree health care and other non-pension benefit plans, which include some localities’ and teacher plans.
Media Inquiries
If you are with the media and would like additional information on The Trillion Dollar Gap, please contact Nicole Dueffert, communications manager, The Pew Center on the States, 202.552.2274.
http://www.pewcenteronthestates.org/report_detail.aspx?id=56695
$1 trillion. That’s the gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.
Why does it matter? Because every dollar spent to reduce the unfunded retirement liability cannot be used for education, public safety and other needs. Ultimately, taxpayers could face higher
taxes or cuts in essential public services.
A new pensions and retiree health care report from the Pew Center on the States, The Trillion Dollar Gap: Underfunded State Retirement Systems and the Road to Reform, shows why states
must take strong action now—or taxpayers will suffer later.
To a significant degree, the $1 trillion reflects states’ own policy choices and lack of discipline:
• failing to make annual payments for pension systems at the levels recommended by their own actuaries;
• expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and
• providing retiree health care without adequately funding it.
Key Findings From Pew's Pensions and Retiree Health Care Report
Retirement benefits provide a reliable source of post-employment income for government workers, and they help public employers retain qualified personnel. For states that have not been disciplined about fulfilling their obligations, the financial pressure builds each year.
• In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim.
• In eight states—Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia—more than one-third of the total pension liability was unfunded. Two states—Illinois and Kansas—had less than 60 percent of the necessary assets on hand.
• Nine states were deemed solid performers, having enough assets to cover at least 7.1 percent—the 50-state average—of their non-pension liabilities. Only two states—Alaska and Arizona—had 50 percent or more of the assets needed.
• Forty states were classified as needing improvement, having set aside less than 7.1 percent of the funds required. Twenty of these have no assets on hand to cover their obligations.
Read more about the issue, the factors driving change and the states that have promising approaches to reform. Download the full report. (Adobe PDF)
States that ignored public sector retirement challenges now face a growing bill come due—one that may have significant consequences for taxpayers. To examine the roots of the problem and how the economic crisis is spurring states into action, the Pew Center on the States held a Webinar on February 18 featuring Susan Urahn, managing director, the Pew Center on the States, and Ronald Snell, state services division director, the National Conference of State Legislatures.
Download Susan Urahn's and Ronald Snell's PowerPoint slide from the Webinar or listen to audio of the event. (MP3, 25.6 MB)
State Data
To help policy makers and the public understand the challenges states are facing, Pew assessed all 50 states on how well they are managing their public sector retirement benefit obligations.
Download the state fact sheets or use Trends to Watch to track national data and access previously unreleased data.
States’ Responses to the Pensions and Retiree Health Care Crisis
For ongoing reporting and analysis about how states are responding to the challenge of public sector retirement benefit obligations, follow the Stateline team’s coverage at stateline.org. Stateline is the independent news gathering arm of the Pew Center on the States.
Methodology
Pew’s analysis for The Trillion Dollar Gap is based on data from states’ own Comprehensive Annual Financial Reports, pension plan system annual reports and actuarial valuations. Pew researchers analyzed the funding performance of 231 state-administered pension plans and 159 state-administered retiree health care and other non-pension benefit plans, which include some localities’ and teacher plans.
Media Inquiries
If you are with the media and would like additional information on The Trillion Dollar Gap, please contact Nicole Dueffert, communications manager, The Pew Center on the States, 202.552.2274.
http://www.pewcenteronthestates.org/report_detail.aspx?id=56695
No comments:
Post a Comment