Thursday, January 7, 2010

Public Pensions Face $2 Trillion Deficit

Even in a world of massive deficits and rising national debt, not many problems come in packages that are in the trillions of dollars. The deficit facing U.S. public pension funds will grow to $2 trillion, according to an interview that the chairman of New Jersey's pension fund, Orin Kramer, gave to the FT. "Estimates of aggregate funding requirement of the US pension system have ranged between $400bn and $500 bn, but Mr Kramer's analysis concluded that public funds would need to find more than $2,000bn to meet future pension obligations."

Even if Mr. Kramer is over estimating the problem, the question remains as to whether the problem can be solved so that state and municipal employees are paid their full retirement benefits. The answer is that it can't, and that these people will get much less than they were promised. Like many other Americans, they will face a shortfall in the money they have for their golden years. (more)

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