As the year progresses we will begin to hear more stories like this one regarding the fragility of the nation's pension system. A combination of financial market losses and budgetary constraints reducing state contributions to pension funds, will result in changes to current and future retiree benefits.-Stories like these should cause nightmares for American seniors or soon to be senior citizens.Lou
$1T hit to pensions could cost taxpayers, workers
SANTA FE, New Mexico — Massive investment losses sustained by public pension funds are pressuring state lawmakers from New Mexico to New York to spend more taxpayer money to shore up their programs, boost the retirement age for newly hired government workers and seek more from employee paychecks.
Pensions need $270 billion in additional contributions over the next four years, and more than $100 billion annually for two decades hence, according to the Center for Retirement Research at Boston College.The pension trouble is just one more economic challenge for states. Income and sales tax collections are dropping fast as unemployment rises.
Jobless benefits funds are running dry, requiring federal borrowing. And because of substantial budget holes, states are cutting back on a wide range of services, including child care subsidies for low-income families and aid to public schools, and in some cases laying off workers.
But as bad as the budget picture looks, it is dwarfed by the size of the gaps in states' pensions, which have collectively lost at least $1 trillion as financial markets swooned over the past year. Public pensions cover about 14 million state and local employees and paid out almost $163 billion to seven million retirees in 2006-2007, according to the Census Bureau.
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