Public employee retirement system crisis continues to worsen
New York is the latest state struggling to bail out its overgrown public pension system. Like the retirement programs of other state and local governments nationwide, the Empire State’s program is in the red, and it’s looking for $750 million in loans this year. What’s worrisome is that until just a few years ago, New York pensions were considered adequately funded.
The story repeats itself from coast to coast. Government retirement programs offer overly lavish promises backed by inadequate contributions and a lack of transparency. New York’s gimmick to get through this year is to offer reduced contributions today in exchange for promises of higher payments in the future. The problem with this approach is that the public employers, the state and local governments, are borrowing from the state’s own pension system so they can finance their contributions to the system. It’s nothing more than an accounting trick: No actual money goes in, but pensions still have to be paid out. The result is a pension system with less funding than before.
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2 comments:
everything connected to the U S Government is in the RED
It's not because the pension system is overgrown or because employee plans are extravagant. The employees have always paid their share. It's taken out of their pay checks and they have no choice.
One of the main problems with employee retirement funds and Social Security it that they keep getting raided for other uses. Governments "borrow" the money but never pay it back.
For example, the money taken out of the Maryland State Retirement System by Marvin Mandel two years in a row over 30 years ago has never been paid back. The retirement system has been changed a few times since then. Each time the price tag has gone up for employees and generally the benefit has been reduced. If the States would live within their means, taxes wouldn't have to go up, fees wouldn't have to increase, they could balance their budgets, and pay the pensions that they have promised their employees.
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