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US Retirement Benefits Underfunding Rises To Record $1.4 Trillion
The Pew Center has released its annual summary of US pension and retirement health care (under)funding. As of 2010, the total underfunding gap rose by $120 billion from the prior year's $1.26 trillion deficit to a record $1.38 trillion underfunding. This number consists of $757 billion in pension promises, not backed by any hard cash, representing pension liabilities of $3.07 trillion and assets of $2.31 trillion. In 2000, more than half of the states had their pensions 100 percent funded, but by 2010 only Wisconsin was fully funded, and 34 were below the 80 percent threshold—up from 31 in 2009 and just 22 in 2008. But that pales in comparison to the ridiculous spread between retiree health care liabilities of $660 billion and assets of, drum roll, $33 billion, or a funding shortage that is $627 billion, roughly 19 times the actual assets in the system! Just seven states funded 25 percent or more of their retiree health care obligations: Alaska, Arizona, North Dakota, Ohio, Oregon, Virginia, and Wisconsin. What this means is soon US pensioners will have no choice but to experience not only austerity unlike any seen in Europe, but broken promises of retirement benefits which will never materialize. The response will likewise be proportional.
Sadly, it is only going to get worse:
The plunge in tax proceeds during the recession made it even harder for states to make their annual retirement contributions. Tax revenues are up in most states but have not returned to previous levels. At the same time, competing, non-pension costs such as Medicaid are rising. Often, elected officials must choose among funding retirement benefits, raising taxes, or paying for schools, roads, and public safety.
Who will pay for the underfunding? In short: someone else:
Overall, states should have set aside nearly $51 billion to pay for these promises in fiscal year 2010, but they contributed just over $17 billion—about 34 percent of what was annually required. Only Arizona made the full contribution to pay for retiree health care and other non-pension benefits. Thirty six states set aside less than half.
Visual summary of Pension obligation funding...
And this is the good news. Behold US retiree health "benefits", or rather, the complete lack thereof. The really bad news? New Jersey has 0.0% of its retiree health benefits funded ($71 billion needed), while California has at 0.1% of its $77 billion in funding needs "covered."
Those who wish to find out more, which would mean everyone both politicians, those in charge, and everyone who believes they will actually get the benefits they have been promised, can read more here.
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That's nice but sorta off topic, since the article had NOTHING to do with Social Security and everything to do with fiscally reckless states and their bloated retirement obligations to state employees.
Amish and Railroad Retirement recipients too.
Too bad the Amish don't have railroads. Just a little too modern and high tech.
Supposedly, there is a study done by JP Morgan that puts the real figure at $4 trillion due to off-balance sheet, hidden state/city obligations... but they are sitting on it out of fear of offending those government entities who send underwriting contracts their way.
That seems like a report someone ought to get and publish.
http://www.nypost.com/p/news/opinion/opedcolumnists/morgan_big_secret_DS...
Incredibly easy solution. No retirement!
Thanks for the excess funds you didn't need. Greaer good and all that.
.......Pee Yew.... is right.
Something stinks.
Good. This is payback for the economists who wrote the textbooks Tyler speaks of.
Your early retirement is screwed because of your own mistakes and wacky, Keynesian kaka.
Did you say Keynesian or Kenyan? I always get those two mixed up since they both fall into the idiot category.
Retirement will soon be a thing of the past. The idea that everyone can at some pre-determined age stop working and live off of savings is pie-in-the-sky to begin with. As far as these government workers go, I hope they don't see a single cent as they have been the ones most responsible for the decline of America into a socialist state.
Why is it 'pie-in-the-sky' to retire if you've saved enough for it?? Savers can absolutely retire, but they should be the only ones.
Wars and death panels..too much time and resources needed to kill off the excess. Not to talk about the uproar from the people, almost enough to give you a migraine. Too much trouble. What I worry about is the stockpile of lethal diseases they have stockpiled in the CDC. Especially valuable will be the strains they have developed vaccines for. Goldman will make sure all their little douche bags will get first dibs at the vaccines as usual, and then the rest for those who can afford it. It'll be silent, deadly, and the people would be too sick to fight back. Perfect.
Good. Government workers have become an arrogant bunch. What logic won't teach them, maybe economics will.
looks like the NJ Police are going to have start paying for those steroids out of their own pockets......
private sector retirement age moved to 120 years old.
What will become illegal is a decent life. That will be a privilege reserved for a few. For the rest it will be dog eat dog, human eat human.
Its not the pensions, its the retirement health benefits and Medicaid expenditures which are increasingly stressing & will ultimately sink state budgets. At the federal level, it is the same thing. Everybody yells about SSI but actuary can fix SSI. It just requires the political will to make some hard choices to raise retirement age, means test it, increase the ridiculous $100k income cap, and adjustsment the COLA formula.
Medicare and to a lesser degree Medicaid are what are gonig to sink the federal budget because no one has a good idea on how constrain healthcare inflation unless you literally shift risk to the indvidual or put a hard cap on gov't health annual expenditures. Ditto the DOD. Thanks to Shrub, the DOD is swimming in future health care costs for the various veterans of Iraq/Afghanistan. Going to increasinly hollow out the defense budget too. Now the US can reneg on its promises to its veterans as it has often done in its history but that isn't politically palpable right now.
Ever notice that anything -- and I really mean ANYTHING -- the federal government touches turns to total shit? Really.
Social Security - total shit, financial failure. (unless your already collecting on the Ponzi)
Medicare, Medicaid, the George W. Bush Prescription Drug Benefit - total shit, financial failure. (unless your a drug or insurance company)
Energy policy - total shit, financial failure (unless your a utility getting a state sanctioned rate increase to cover captive costs).
Food and Drug - total shit, financial failure (unless your a government sanctioned drug or insurance company under ObamaCare)
Agriculture - total shit, financial failure (unless your Monsanto cornering the rights to all the seeds on earth, et. al.)
Education - - total shit, financial failure. (unless your an inner-city failure school)
Transportation - you get the picture
etc...
There is one market that the government hasn't turned to total shit, but they are trying real hard. The IT market. Now they are picking at it via NDAA/SOPA/ Internet Security etc.. If the government would have had their meat hooks into IT since the onset of PC technology (just after Regan was President) a laptop would cost at least $15,000 today instead of $400. A GB of disk space would be $1000 instead of a couple bucks.
Technology and the relatively free markets of Tech and IT have driven prices down and features and speeds up. Only the likes of a bloated corrupt federal state system could screw that up. And while the original net came out of the governments DARPA and Universities, the pukes in D.C. are now gunning for the commercial Internet now. Monthly fees for unrestricted high-bandwidth use are about $50 / month. If the Department of Homeland Stupidity gets into monitoring and controlling the Internet expect limited use and 10 times the price. (total shit, financial failure. (unless your a government sanctioned Internet service provider))
A Spanish influenza type outbreak among the elderly might be the only effective solution
What if that outbreak was just limited to about 1,000 persons or so starting with the first 538 in Congress then a few dozen at the whitehouse, and cabinet departments?
Awh, what's another trillion and a half.
The neighbors next door are on SS Disability. It worked out so well a for the old man that I believe the wife got in on it a few years back as well.
They just put in a big new deck made out of expensive composite materials -- nice white railing as well.
Their call themselves "Democrates", which I believe is one of the forms of collectivism under The State, similar to Republicans. (They both watch MSM TV; and avoid truths like: the MIC, remote Drone Warfare killing civilians, The Fed and Banking mainipulation of the politik and society, truths of the few statesman left like Ron Paul.) They would think "Zerohedge" means no shrubbery allowed.
In Ohio, a bunch of us collected signatures to get a vote on Health care Freedom to be added to the State Constitution Bill of Rights -- and after 2 years of work we got it on the ballot -- and it was passed into law. Now nobody In Ohio can be complelled to purchase Health Insurance per State Law -- it's individual or company's choice. (http://www.theohioproject.com/)
I once told my neighbors ( the same ones with the new deck) that I wouldn't pay for Federal Health Insurance if forced to (I would just pay the fine, which is cheaper), because Obamcare says that a hospital or Doctor must treat me if I don't have or can't aford insurance. The neighbors basically called me a cheapskate, and said I wouldn't be "paying my fair share". I wonder if they'll get a big new hot tub on their big new composite deck?
If the SHTF, I really hope they'll come by and ask for stuff.
Obamney 2012! Different piles, same shit.
God Bless America and the Constitution, screw the federal government and the banksters who own them.
These people sound like typical scum. I know someone who has Chicago FD retirees like this vermin. Hopefully those pensions blow up. Those composite decks are not as good as advertised. They can warp, delaminate, splinter and other failures.
If the SHTF and they com eover to borrow - you might lend them some lead.
My nieghbors are the same as to SSI, but the woman has an elderly parent who put about $250K in renovations and landscaping in the max value $90K ranch and moved in.
I especially love this post citizenpete. Collectivism illustrated nicely.
"Who will pay for the underfunding? In short: Someone Else"
Man, Mr. Someone Else has been around a long time. Let's hope he doesn't pass away anytime soon.
At least on the Federal Level the Socialist Security lockbox has never been raided by the Gov't, so we're still good there, right? And I know there's still Gold in Fort Knox. I saw Obama and Bernanke walking out the front door there after they were done checking on it in early '09. It's so good to know the Gov't looks after my own money better than I ever would. I loved those Bank bailouts my money went to a few years ago... err, I mean investments.
Almost forgot, it's time for me to head off to my job at Solyndra!
Easy Rider - Can't find my way home
http://www.youtube.com/watch?v=m25BWUmcab0&feature=related
What? The bankers stole all the money?
WTF?
Does this mean the bailouts were just for bonuses?
I can't believe it.
(/sarc)
Occupy Matlock!
rising pension and healthcare costs. this is a problem also in europe. It's every man for himself now. That is why i trade cfd's
US is not Greece
In your dreams.
U.S. has over $65 Trillion of debt and unfunded liabilities.
The belief that the U.S. is not completely insolvent is the biggest fantasy in Western Civilization.
Definately NOT SPARTA!
The fires of frustration and discord are burning in every city, North and South, where legal remedies are not at hand. Redress is sought in the streets, in demonstrations, parades, and protests which create tensions and threaten violence and threaten lives.
We face, therefore, a moral crisis as a country and as a people. It cannot be met by repressive police action. It cannot be left to increased demonstrations in the streets. It cannot be quieted by token moves or talk.
Well the solution in California is to cut programs for the poor to save the public unions.
"The budget California’s Democratic- controlled Legislature sent to Governor Jerry Brown last week granted concessions to public employee unions even as talks continue on cutting programs for the poor."
http://www.bloomberg.com/news/2012-06-18/california-public-employees-win...
Of course the Unions contributed over $76 million to California politicians and ballot measures in 2010 to make sure that they were well represented...
Oohhhhh, public "union" in the biblical sense. Gotcha.
Comment removed by CISPA
pending review by Homeland Security.....
Measuring a debt like obligation at 8% is a joke. Corporate average was 4.25% in 2011...
The whole point of articles like this one is to prepare us for not having our pensions. Of course the ostensible reason is to keep us informed, and most of us take it in that spirit, but consider that such an article, if it were written by the an intelligence arm of the government, would be written specifically to spread pessimism and defeatism, and head off any potential revolt while the TPTB profit from this fait accompli. Of course we know that ZH is not a front for these agencies.
With time, countries with a consumer spending driven economy become semi-communist state, It's just the order of things.
They won't run out for quite a while. State taxes will keep rising. Eventually, the federal government will print them a trillion. It's most everyone else that is screwed by this not the state employees or at least not the older state employees.
My Grandfather had no retirement fund, he put his earnings into land ,improvements to his modest home, never borrowed, and owned hard assets including silver. He also had no mobile phone bills, or cable tv bills. After he died in 1952 my grandmother was able to live comfortably and unassisted until her death in 1972 at which time she had a small estate to divide amongst her 3 children. Live within your means, work for yourself, not the international banking cartel.
A sensible living
Today- IPHONE, Cable TV, fancy cars, designer clothes, IPAD, and more crap and more crap .
Life is defined by bumber stickers and crap in the garage, nuf said.
I just bought more Au at 1635. Time will tell if this was a smart move.
Party is over. Time for the makeup to come off.
By REUTERS
http://www.nytimes.com/2012/06/19/business/global/fairfax-to-cut-1900-jo...
Morgan’s big secret
While the Senate Banking Committee last week spun its wheels trying to get JP Morgan chief Jamie Dimon to admit to something nefarious during testimony about his “London Whale” trading loss, executives at the big bank were concealing a far bigger scandal.
OK, it’s no secret that nation’s public pension funds are in big trouble, holding large “unfunded” liabilities owed to public workers once they retire. But most politicians (New Jersey Gov. Chris Christie is an exception) will tell you the problem is fairly containable, that there are simple fixes — such as raising taxes on the rich or pruning benefits.
REUTERS Silent on the real problem: Even as senators quizzed JP Morgan’s Jamie Dimon about his losses, he was mum about the muni-market mess.
Not so, warns a “strictly confidential” report JP Morgan issued last year. It describes in straightforward, frightening detail how underfunded pensions are huge ticking timebombs for many of the nation’s big cities and states.
The scandal isn’t simply that most public officials are misleading the public about the enormity of the problem and what steps must be taken to address the matter. As the Morgan report notes, many of the real liabilities are located “off balance sheet,” hidden from the public’s eye, and lax accounting standards let cities and states minimize their enormity.
It’s also that JP Morgan itself kept the report’s findings a secret except for a few big clients, mostly hedge funds and large institutional investors, who got the inside tip on which states and cities are most likely to default on their debt as their pension liabilities fester.
Yes: Default is a very real possibility, because the solutions are far from easy.
more
http://www.nypost.com/p/news/opinion/opedcolumnists/morgan_big_secret_DSB0O9VFZwDih1ZrjkeaAN
Health benefits should be denied anyone if they are still breathing. There fixed that problem.
In Colorado it is in our State constitution that they have to pay....they cannot cut the pension......and of course just like California...in the 90´s they voted a big increase in pensions because they were making so much money...can´t recind that now....and guess what..the Politicians get the same benefits and are a part of what they are voting to increase.....but I don´t see how they are going to double or triple the income taxes to pay for it...they will never be re-elected...so I see a "constitutional change" party emerge...and boy will that be a Unions vs We the people fight...
This is your reward, citizens of America, for sacrificing the family upon the altar of the state, and traditions of your ancestors for the mythos of 'progress'. For hundreds, no thousands, of years of recorded human history, the family shared a household, from the cradle to the grave, from generation to generation, whether aristocrat or peasant, children raised by their parents and parents sheltered by their children under the roof of the ancestral home. But of course, in America, amongst Americans who naturally know so much better, such is the dissolution that it is even considered disgraceful and trying for any such situation to exist; you seek to kick your sons and daughters from the roost at the first opportunity, and shouldn't be surprised that you cannot turn to them in your old age and will instead have to slave away for the rest of your miserable lives spent in some retirement home when the machinery of the state finally comes to a grinding halt.
Nothing wrong with the family solution for those who prefer it, but that's not the fundamental answer. Family can and often does become the same corrupt kind of socialism and consequences shifting that whole societies become.
The answer is individualism and self-responsibility. Be frugal and responsible rather than spendthrift, save rather than borrow, build up a buffer you can fall back on if necessary, or eventually enjoy if not necessary. And if the dice really roll against you, accept that too, and go out honorably. Compared to what humans had to face for 99% of human history, modern humans have nothing to complain about except predators DBA government.
But, but, but, if the top 1% paid their fair share, we could all retire at 50.
Look on the bright side - they can't steal what's not funded.
Once the Central Bankers get a few good wars going they will be
able to reduce these unfucked pensioners.
All kidding aside, and to completely understate the issue...this is a problem...you plan for disability, you plan for your kid's college, you really need to sit back and look at these charts (especially the second one) and get a plan in place for the next decade because the government is coming for your income and assets in an attempt to keep civil order..
My answer was "get out of dodge". I never expected to receive a penny, and I won't, whether voluntarily or otherwise. But no way, no how will I let them steal my savings to pay banksters and irresponsible government/union retirees, etc. That's why I left over 2 years ago, and every day that seems like a smarter move. I can't even imagine going back!