Pension Mess!

The States' Unfunded Pension Nightmares

Pensions: The stock market boom has helped everyone, right? Nope. States' pension funds have nearly $4 trillion of stock investments, but somehow haven't benefited from soaring stock prices. 

A new report by the American Legislative Exchange Council (ALEC) shows why this is true. It notes that the unfunded liabilities of state and local pension plans jumped $433 billion in the last year to more than $6 trillion. 

Let that number sink in for a moment: It's one-third the size of the U.S. economy, equal to "a whopping $18,676 for every man, woman, and child, or nearly $50,000 for every household in America," as The Daily Signal notes. 

It's a massive amount of money, in short.  

All because state officials and politicians never 

had the gumption to tell public-employee unions 

"no" when they asked for even more. 

So their gilded pension plans will soon start bankrupting states, such as Illinois and Connecticut, which now can't pay their pensions.

DYI:  The U.S. has been experiencing rolling bankruptcies moving slowly but continuously from State to State* and City to City.  Obviously current pensioners will have reduced payments commonly called a haircut and those still working will have more of their paycheck going to their pensions.  A few States and local governments have moved to the 401k style plans thus eliminating future problems with younger and future hires, however this has the short term problem of reducing vital dollars for the current old style plan.  No doubt this is one hell of mess and fixing it will leave everyone feeling cheated especially retirees who will suffer a drop in monthly pension income.  When the next recession hits depending how deep it is bankruptcies will pick up a lot steam and if it is deep expect multiple cities going under at the same time.

* [I realize States cannot file bankruptcy but how they work through the debt problem is very much the same.] 

DYI