Public Pensions: Of all the problems faced by cities and states, none is so costly as public employee pensions. Yet, most Americans don't realize they're on the hook for trillions of dollars in unfunded pension liabilities.
A new report by the American Legislative Council, or ALEC, warns that state and local governments are $5.59 trillion short when it comes to funding their public employee pensions. That's an alarming amount -- equal to roughly $17,427 per person, or $69,700 per family of four, ALEC says. That's a lot of dough.
But the amount varies widely by state.
Alaska for instance is tops, at a whopping $42,950 per person, followed by Ohio ($28,538), Illinois ($28,200), Connecticut ($27,653), and New Jersey ($26,288). Tennessee, meanwhile, is at the bottom, with a mere $7,246 per capita. The bottom five is rounded out by Indiana ($8,573), Wisconsin ($9,156), Nebraska ($9,159) and North Carolina ($9,599).
Now here's the troubling part. No matter what state you live in, you're going to pay for it. All of it. Unlike your 401(k), IRA, or company pension, public employee pensions are fixed by law.
"Given that pension payments to retired state employees are guaranteed, taxpayers are ultimately responsible for making up any funding deficit," the report states. At some point, a judge will order your taxes raised to pay for these pensions. And the tax hikes will be huge, meaning you will have less to save for your retirement. This will certainly lead to civil disobedience -- perhaps even violence.
If you're wondering how this happened, the answer isn't simple...
Read more at:
http://www.investors.com/politics/editorials/the-looming-pension-crisis-of-state-and-local-governments/
