The

Pension

Time Bomb!

Pension Crisis Reaching a Tipping Point

With several states and local governments across the country facing insurmountable public pension obligations, and a few cities having already declared bankruptcy to cope with the problem, it’s becoming increasingly clear that the current system is unsustainable and will have to change. 

The short answer is, yes, we’re likely at the beginning of a crisis. From a national perspective, all state and local government pension debt amount to $4.7 trillion, McQuillan stated. 

Ultimately, very generous assumptions on expected investment returns of around 7.5 to 8 percent or more helped enable the crisis. 

“The bottom line is that if they use the same pension fund assumptions to calculate the unfunded debt in the private sector that they do in the public sector, the private sector pension fund managers would be in prison because you can’t get away with making the same rosy assumptions in the private sector that you can in the public sector,” McQuillan said. “There are federal laws that prevent that sort of cooking the books.”

DYI:  The State’s pension crisis’ is nothing more than pure vote buying.  Vote as a block – State workers, police, firemen, teachers – and we will promise you the moon for pension benefits.  Well the chickens have come home to roost as the surging Boomers enter and nearing retirement.  If this was in the private sector administrators and politicians would have handcuffs on for cooking the books.  But alas this is not the private sector but the Wild West public sector. Pensions are going to be cut back along with city and State budgets plus more borrowings to fill in the remaining gaps.  Many cities over the next 10 years are going to file for bankruptcy as well; no matter how many judicial mandates come to pass.  You simply can’t get blood out of a rock.  Add on an overvalued stock and bond market, an out of control medical, military, and university complex, budget deficits for Federal and State governments as far as the eye can see; what could go wrong??? 

DYI