I covered how individuals benefit from the .gov pensions here. This post is dedicated to how it impacts the state or the nation as a whole.
The estimate by Orin Kramer will fuel investors’ concerns over the deteriorating financial health of US states after the recession. “State and local governments are correctly perceived to be in serious difficulty,” Mr Kramer told the Financial Times.
“If you factor in the reality of these unfunded promises, their deficits will rise exponentially.”
Estimates of aggregate funding requirement of the US pension system have ranged between $400bn and $500bn, but Mr Kramer’s analysis concluded that public funds would need to find more than $2,000bn to meet future pension obligations.
Via Volokh Conspiracy via Steven Greenhut in WSJ:
A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, “This year alone, $3 billion was diverted to pension costs from other programs.”
US public pensions face $2,000bn deficit By Francesco Guerrera and Nicole Bullock in New York Published: January 4 2010 23:01 | Last updated: January 4 2010 23:01