I thought it was an outrage when it was reported that the unfunded liability for state government pension plans was about $500 billion, or perhaps even $1 trillion. I’m not even sure what to say about this item. Writing in the Wall Street Journal, Andrew Biggs from the American Enterprise Institute estimates that the shortfall for overly-generous pensions for state government bureaucrats is about $3 trillion:
Pension plans for state government employees today report they are underfunded by $450 billion, according to a recent report from the Pew Charitable Trusts. But this vastly underestimates the true shortfall, because public pension accounting wrongly assumes that plans can earn high investment returns without risk. …In a recent AEI working paper I’ve shown that the typical state employee public pension plan has only a 16% chance of solvency. More public pensions have a zero probability of solvency than have a probability in excess of 50%. When public pension assets fall short, taxpayers are legally obligated to make up the difference. The market value of this contingent liability exceeds $3 trillion.
[…] be the case whether they’re supposedly based on real savings (like company retirement plans or pension funds for state and local bureaucrats) or based on pay-as-you-go taxation (like Social […]
[…] to be the case whether they’re supposedly based on real savings (like company retirement plans or pension funds for state and local bureaucrats) or based on pay-as-you-go taxation (like Social […]
[…] the case whether they’re supposedly based on real savings (like company retirement plans or pension funds for state and local bureaucrats) or based on pay-as-you-go taxation (like Social […]
The thing is, the well has run dry. Law or no law, people are simply not going to live in cardboard boxes so that government employees can preserve their pensions.