Government Workers' Pensions Underfunded by $3 Trillion

Tuesday, 24 Aug 2010 05:18 PM

By Grover Norquist

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
From the ATR website.

With state and local spending overruns having prompted officials to take a second look at current spending levels and future obligations, what has become apparent is that the current Ponzi-style, defined-benefit pension system employed by many states poses the greatest threat to state austerity.

Looking to avoid politically difficult but necessary pension reform, states have been borrowing money, issuing bonds, estimating unreasonable returns, and cooking the books to hide their pension liabilities.

Applying private-sector accounting practices to state pension funds reveals an enormous discrepancy between state’s publicized and actual liabilities.

Total underfunding of public employee pensions
  •  State and local government pension underfunding is $3.04 trillion.
  • Public school teachers’ pension underfunding totals about $933 billion.
  • California’s government pensions are underfunded by $535 billion—that’s six times its annual state budget; $35,000 for every household in California; and more than the gross domestic product of Saudi Arabia, Sweden, Switzerland, or Poland.
  • State and local pension plans have only a 16 percent probability of being able to cover accrued benefit liabilities with current assets.
Government workers receive generous pensions, driving up costs
A key factor in the underfunding of government employee pensions is the inflated benefits promised to individual workers. On average, government workers with defined benefit plans are owed $2.85 in retirement benefits per hour worked compared to a private sector worker with a defined benefit pension plan who receives $0.41 in pension benefits per hour worked.

Reform is difficult and easily demonized
The biggest opponents to pension reform are the current recipients of generous pension benefits, many of which are union members. More than 35 percent of government workers are represented by a union compared to 7 percent of private sector workers.

Furthermore, pension benefits are guaranteed by law or state constitution giving current government unions and workers little incentive to renegotiate their contracts.

States should shift to defined-contribution retirement plans
The current public pension structure is unsustainable and unfair. Switching to defined contribution pension plans — as a majority of the private-sector businesses and a number of states already have done — would preserve workers' retirements and alleviate the government’s burden on taxpayers.

Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases.


© 2014 Newsmax. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Small Businesses Hit Hard by Internet Sales Tax

Thursday, 11 Dec 2014 13:46 PM

It is essential to small business owners throughout the country that an Internet sales tax not become law. . . .

Boehner Stands Firm Against Internet Tax

Monday, 08 Dec 2014 16:50 PM


Last Wednesday, House Speaker John Boehner stood firm against an Internet sales tax. . . .

Essential to Preserve Earmark Ban

Tuesday, 02 Dec 2014 11:38 AM

The earmark ban is too important to be bogged down in unintended consequences and mission creep. ATR looks forward to wo . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved