Tuesday, December 18, 2007

Report: State Pensions underfunded by $731 Billion

Nationwide public sector retiree benefits are underfunded by $731 billion, according to a 50-state study by the Pew Center on the States.

Of that shortfall, nearly half ($370 billion) is needed for future retirees’ health care and other non-pension benefits, such as dental and life insurance, the Pew Center on the States said in “Promises with a Price,” a 50-state analysis of state retiree benefits.

States have always been required to publicly report their long-term pension liabilities, but starting in 2008, states also have to estimate the price tag of health care and other non-pension benefits

Only Arizona, North Dakota, Ohio, Oregon, Utah and Wisconsin were on track at the end of 2006 to fully fund retiree benefits other than pensions for the next 30 years, Pew said.

On the pension front, Colorado, Illinois, Kansas, Michigan, New Jersey, Oklahoma and Washington have consistently fallen short in recent years of meeting their future pension obligations, Pew said.

The report describes the “pension envy” some workers in the private sector feel for their counterparts in state government. More and more workers in the private sector have to help pay for their own health care and retirement plans, and at the same time have to foot the bill for these same benefits for state workers. “The gap between public and private-sector benefits fuels the political debate, as taxpayers notice that they are contributing to government employee retirement benefits that are increasingly unavailable in the private sector,” the Pew report said.

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