$5.2 Trillion of Government Pension Debt Threatens to Overwhelm State Budgets, Taxpayers
The comments below are an edited and abridged synopsis of an article by Chuck DeVore
The updated assessment of America’s unfunded state and local government pension fund (by Pension Tracker) is not optimistic, especially in Alaska, California, Connecticut and Illinois, where the per household pension debt ranges from $102,084 to $76,398.
While the economy and stock market have lifted pension fund investments, most pension funds assume unrealistically high returns and expose taxpayers to significant risk if their investment decisions don’t return projected earnings.
State and local governments, including public schools, either pay into Social Security just as private sector employers do, or they run their own pension systems.
There are increasingly large stakes in the outcome as government gets bigger and more powerful. It is no different with pensions for government employees, where powerful government employee labour unions, controlling more than a billion dollars of annual spending at the federal and state level, lobby elected officials to increase the value of their members’ pensions.
Pension Tracker has collected data from around the nation and, in California specifically, has gathered information from more than 1,200 counties, cities and special districts to determine that the total market pension debt in California is more than $1 trillion, or $78,334 per household, the second-highest in the nation after Alaska. Nationally, Pension Tracker calculates the total pension debt on a market basis at $5.2 trillion, or an average of $43,179 per household.
Unless pension funds around the nation continue to earn 7% or more per year on their investments, it’s likely that taxpayers will be on the hook for trillions of dollars of promises to government unions. These promises have been made by politicians past and present, resulting in pressure to increase taxes and cut government services.
