The Pew Center on the States study discussed by The Associated Press here in June put unfunded public pension liabilities for 2010 at $757 billion.
Now in October Reuters reports here that the sum is more like $1.2 trillion according to a different study by Milliman actuaries.
Both stories refer to unrealistic earnings expectations for public pension funds, which sometimes are in the vicinity of 8 percent when actual experience in the past five years has been more like 3 percent.
With long-term interest rates continuing to fall well below 2 percent and the Fed explicitly suppressing interest rates as a matter of long-term policy, such expectations seem more outrageously optimistic than ever. If taxpayers don't wake up they'll be left holding the bag for the shortfall.
Not mentioned in the Reuters story is the other problem, almost as big, mentioned by AP:
"Pensions aren't the only retirement problem. States also faced a $627 billion shortfall in health care services for retirees. Essentially, for every $1 they'll eventually have to pay out in health care, states had set aside only 5 cents."
Promises to public sector workers at all levels far exceed what private sector workers can expect for themselves, and promise only to bankrupt municipalities and states.
It is high time we change the promises.
