The Current State of the United States Pension Crisis

The United States at this time faces about $6 trillion in unfunded liabilities from pension plans. This number has increased by more than $433 billion over the past year even though the U.S. stock market has made consistent gains over that time. This is because of the ever increasing promises of benefits to state and local employees as well as the poor decision making of investors controlling these pension funds.
Breaking that $6 trillion deficit down to the individual level, that debt from unfunded liabilities equates to $18,676 for every man, woman and child in the U.S. This figure takes for granted though that this pension debt is the same for each state, which simply put is not the case. There are some states in which the debt sits at lower than $10,000 per citizen. While still a large number, $10,000 is a fraction of the ratio of unfunded liabilities per citizen in a state like Connecticut or Illinois, where unfunded liability per capita ranges from $28,100 to $45,700 per person.

With astronomical liabilities per capita in a state like Illinois, how could there be local officials trying to politicize these pension accounts? There are pension leaders, for example Chicago Treasurer Kurt Summers, who are campaigning for an overhaul of pension fund accounts into more “socially responsible” investments. This statement has gained the treasurer a sizeable amount of public attention, but does it make sense? In short, no. It does not. The funds that Mr. Summers is campaigning for are unproven, untested investments that have not been proven to provide the sort of long-term returns that are required for accounts like public pensions. There is also the point that these funds are not for Mr. Summers to politicize and use as a weapon; pension funds are not his money. These funds belong to the hard working public employees of his city and state – people that trust their public officials to make responsible choices with their retirement accounts.

The Institute for Pension Fund Integrity expects the same out of elected and other public officials within federal, state and local government. Pension accounts are not tools to win an election or to push a political cause.