- The California State Pension system lost more than $100 Billion dollars in the 2008 financial crisis and has still not fully recovered
- The League of California Cities released a report claiming that pension costs are expected to rise more than 50% by 2024-2025. This would mean that 16 percent of the annual budget for the state of California would be devoted to paying the pensions of public servants.
- CalPERS, or the California Public Employee Retirement System, has reported a funding percentage of 65%.
- Unfunded liabilities for the CalPERS account total more than $62 billion.
- CalSTRS, or the California State Teachers Retirement System, has reported a funding percentage of 65%.
- Unfunded liabilities for the CalSTRS account total more than $74 billion.
- The unfunded liabilities of CalPERS and CalSTRS have grown by $63 and $65 billion in the past twenty years, respectively.
- Total state pension debt sits at $203 Billion
- State Government Debt: $152.6 Billion
- Local Government Debt: $50.8 Billion dollars
- Total Pension debt equates to $41,000 of pension debt per household in Illinois
- Supreme Court ruled in 2015 that state employee pension agreements could not be modified, meaning that Illinois is on the hook for full pension costs
- Benefits for state retirees have grown more than 900% since 1987
- 60% of retirees retired in their 50’s with full benefits
- 60% of retirees can expect to spend 25 years collecting full retirement benefits
- Average career pensioner will receive more than $2,000,000 in retirement compensation
- Employee contributions over the course of one’s career equates to only 6% of retirement benefits received over the course of retirement
New York City Pension Fund
- New York City officials estimate the pension debt at $65 billion, but the Manhattan Institute estimates the debt at $142 billion
- New York City pension plans assess the return on long-term pension investments to be 7%, when the real return on long term bond investments is closer to 2%.
- Today, 11% of the budget of New York City is devoted to servicing the pension plans of its retirees
- New York City increased benefits to retirees in the early 2000’s – without the funding to do so. That move has costed the city more than $13 billion to the pension bill in the decade following.
- New York City made a new rule in the early 2000’s that exempted most city employees for having to contribute to their pension plan during their employment.
- The New Jersey state pension system is comprised of seven public service pension funds.
- As of January 2018, that State of New Jersey Pension Fund possessed assets that covered 30 percent of outstanding liabilities, below the 40 percent mark that the Rockefeller Institute deems “crisis level”
- The New Jersey State Pension Fund is the most under-funded in America with $124 Billion dollars in debt heading into 2018
- According to the new accounting standards introduced by WNYC, the total pension debt is $253 billion dollars as of 2018. The total state budget for New Jersey is $35 Billion.
- By 2023 the state will be liable for $11.3 billion dollars of pension benefits, amounting to 27 percent of the total budget for the state
- The Urban Institute Pension Report Card gave the New Jersey State Pension Fund a rating of “D”
Taxpayer-funded contributions to government pensions can make up one the largest single elements in a local budget. Manhattan Institute scholars have consistently pushed for governments to reform their pension system and thus avoid the necessity of cutting public services.
Absent significant reforms, unfunded liabilities of state-administered pension plans will continue to grow and threaten the financial security of state retirees and taxpayers alike. The fiscal calamity could be far deeper and prolonged than the Great Recession.
As the world’s population lives longer, it will become increasingly important for plan sponsors, retirement advisors, regulators, and financial firms to focus closely on how older persons fare in the face of rising difficulties with cognition and financial management.
On the basis of its fiscal solvency in five separate categories, Connecticut ranks 37th for fiscal health among the US states—a significant jump from last year’s ranking of 50th.
View the article: Mercatus Center: Ranking the States by Fiscal Condition 2017 Edition