Pension Gap of $1 Trillion Is ‘Daunting’ Bill to U.S. States

[FarCenter]

By Darrell Preston and Nanette Byrnes

Feb. 18 (Bloomberg) -- U.S. states must contend with a more than $1 trillion gap between what they have saved and what they have promised to retired workers for pension and health-care benefits, the Pew Center on the States said in a report today.

States have saved $2.35 trillion of the $3.35 trillion owed to workers as of mid-2008, the center said. The Washington-based group expects the deficit to grow because of investment losses states sustained in the second half of 2008, the report said.

Illinois,Connecticut and New Jersey were among the 16 lowest-ranked in terms of funding pension and retiree health care, according to Pew. The gap reflects “states’ own policy choices and lack of discipline” in failing to set aside enough money and expanding benefits without deciding how to pay for it, the report said.

“States don’t manage this liability and the costs continue to go up,” said Susan Urahn, managing director for the Pew Center, in a conference call with reporters yesterday. “States will either have to make cuts in other priorities or raise taxes.”

Local governments’ borrowing costs in the U.S. municipal bond market may rise because companies that grade the debt factor in the liability, said Urahn. Investors seek higher yields when ratings are lower to compensate for the perception of greater risk.

<SNIP>http://www.bloomberg.com/apps/news?pid=20603037&sid=a5N852fTN2SE

[Skink]

1. Some states bet heavily in the derivatives market.

sorry about putting all your money in unregulated hedgefunds people. What did you expect we are republicans.

[Trillo]

2. Waxing either sarcastic or idiotic,

Can't States just tax retired people to pay for retired people's pensions?

[SoCalDem]

3. People who are ready to retire are no "surprise"

We (they) have been here for at least 65 (give or take) years and have been paying INTO these plans for probably FORTY years...and now the government & these shifty plan-managers are surprised that we expect to start drawing that money??? :wtf: