Town's Pension Fund Failure a Warning Sign

Thursday, 23 Dec 2010 01:00 PM

By Ronald Kessler

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What happened in a tiny, broke Alabama town when its pension fund ran dry could foreshadow the misery awaiting other cash-starved localities and even whole states, The New York Times reports. When checks to the 150 city retirees of Prichard, Ala., near Mobile, stopped going out in 2009, many cut-off recipients saw their lives upended

Some went back to work. Others filed for bankruptcy. One pensioner, a retired fire marshal who was too young to collect Social Security and too proud to accept help, was found dead in his home in June with no electricity or running water.

“The situation in Prichard is extremely unusual . . . but it proves that the unthinkable can, in fact, sometimes happen,” the Times reports. “And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain.”

The pension crises loom large in a debate the Wall Street Journal’s Peter A. Brown writes could be “among the most contentious . . . that will face the new Congress in January”: whether the federal government should bail out the states, whose total red ink exceeds $100 billion.

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