Report: States $1 Trillion Short in Pension Obligations

By:
Chris Gaetano
Published Date:
Aug 25, 2016
Pension

A recent report from the Pew Charitable Trust has found that states owe about a trillion dollars more in pension obligations than they are able to pay, according to CNN Money. The problem seems to be a macro-scale version of simply not putting enough money into your 401(k) to be ready for retirement. The report said that most states have not put enough money into their pension systems to actually pay all the benefits they have promised to their workers.

CNN Money said that only 15 states actually have enough money on hand to be able to pay their retirees: West Virginia, New York, Indiana, South Dakota, Louisiana, Utah, Wisconsin, Oklahoma, Tennessee, Nebraska, Maine, Idaho, Vermont, North Carolina and Delaware. New Jersey, meanwhile, was in the top 5 worst funded states, with its pension system only 42 percent funded. 

State governments, said CNN Money, have been trying to close the gap through investments rather than direct contributions, but weaker market returns mean that the gulf will only widen. States will need to change their funding policies to actually contribute more than what's needed in order to meet future benefit obligations, as there is also the need to pay down pension debt. 

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