Sunday, August 05, 2007

The Public Employee Pension Mess

I've been watching this drama unfold over the last 5 years. I've posted about the issue in this blog and I've seen countless stories about it in many national publications. Now the New York Times has published a very good story by Mary Williams Walsh on how bad the problem is - and it's much worse than many have thought.

Follow this link to a short commentary from Andrew Samwick, a Dartmouth professor who has written on pension problems and social security. A short comment from Mary Williams Walsh:

It is hard to know the extent of the problems, because there is no central regulator to gather data on public plans. Nor is the accounting for government pension plans uniform, so comparing one with another can be unreliable.
But by one estimate, state and local governments owe their current and future retirees roughly $375 billion more than they have committed to their pension funds.
And that may well understate the gap: Barclays Global Investments has calculated that if America’s state pension plans were required to use the same methods as corporations, the total value of the benefits they have promised would grow 22 percent, to $2.5 trillion. Only $1.7 trillion has been set aside to pay those benefits.

It looks as if years of short sighted politics will be landing in everyone's laps soon!

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