Boasting a median income greater than any other state in the U.S., Connecticut is a beacon of personal prosperity. Connecticut is also known for something else – something far darker, and much more daunting for future generations: an underfunded state pension system with more than $20 billion in unfunded liabilities heading into 2017. That means that the state retirement system is only 37 per cent funded. What is the state of Connecticut doing to combat this stark reality? The government of Connecticut recently passed a spending plan that would contribute only $2.2 billion per year to the state’s retirement account as of calendar year 2027, meaning the future generations of Connecticut residents will be left paying that debt.
Due to this mounting pressure of looming fiscal hardship, Connecticut has reached out to union leaders within the state to try and reach new agreements for retirement plans and investment strategies. This new strategy resulted in a Tier IV ‘Hybrid” plan for new hires, with the pension fund being supplemented by a 401(k) plan paid for by the employee. This concession, paired with the agreement reached by SEBAC with the state government resulting in a wage freeze for state employees, will result in a $1.3billion decrease in state liabilities by the year 2019. This is a modest decrease in liability for the state government, dropping the deficit from $21.7 to $20.4 billion over that year.
These sorts of concessions by state employees and bargaining on behalf of the state government are just the beginning for the people of Connecticut. Thanks to irresponsible investment decisions and the harsh politicizing of retirement funds, the people are left to clean up the mess made by state government officials. It is time to face the facts when it comes to state budgets and retirement funds; without responsible actions on the side of officials the people will always be left shouldering the burden on mounting retirement costs.