Seven State Pension Plans Out of Money by 2020

In a system, gone completely loony, pension plans in seven state will be busted by 2020 yet the states keep hiring public workers. Please consider Pension Plans Go Broke as Public Payrolls Expand. Seven states will run out of money to pay public pensions by 2020. That hasn’t stopped them from hiring new employees. The seven are Illinois, Connecticut, Indiana, New Jersey, Hawaii, Louisiana and Oklahoma, according to Joshua D. Rauh of the Kellogg School of Management at Northwestern University. Combined, they added 9,700 workers to both state and local government payrolls between December 2007 and April of this year, says the U.S. Bureau of Labor Statistics. Generous and bloated are the terms that have been used to describe them; critics have set up websites to pillory those government retirees who enjoy $100,000-plus annual pensions and other goodies, such as health-care benefits for themselves and their families for life. “Are State Public Pensions Sustainable? Why the Federal Government Should Worry About State Pension Liabilities” is the title of Rauh’s recent study. It’s a provocative piece of work, especially for one of its tables, titled, “When Might State Pension Funds Run Dry?” Pension Security Bonds: A New Plan to Address the Pension Crisis I have covered this before but its worth another look. Please consider Pension Security Bonds: A New Plan to Address the Pension Crisis As I have blogged previously, states are making financial promises that they cannot possibly keep, and the bills are coming due much sooner than you think. Unless action is taken soon, the federal government will face intense pressure to bail out the affected states, at a price tag of $1 trillion or more. The outline of the plan is that the federal government should cut a deal with states. They should allow a state to issue tax-subsidized bonds for the purpose of pension funding for the next 15 years — if and only if the state government agrees to take three specific measures to stop the growth of unfunded liabilities: 1. The state ...

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