Tags: Pensions | Borrow | Pay | Retirees

Pensions Borrow From Pension Funds to Pay Retirees

Tuesday, 28 Feb 2012 07:33 AM

Cities and counties across New York are borrowing from a state pension fund in order to turn right back around and tell the fund they have the money they owe it.

New York state and local governments are borrowing $750 million from the $140 billion state pension system to finance their contributions to that very same system, the New York Times reports.

Borrowing could rise to $1 billion or more over the next year.

Experts call it kicking the can down the road.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

"You're undermining the long-term solvency of these funds and making the pension fund even more of a gamble than it already is," says Josh Barro, a senior fellow and pension expert at the Manhattan Institute, a conservative research organization, according to the New York Times.

The state hopes financial markets will improve over the next decade and allow the problems two work themselves out on their own.

"If performance continues to be weak, then contribution rates will be even higher than the rates we’re trying to avoid now, and you’ll produce even more fiscal pain down the road," Barro says.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

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Tuesday, 28 Feb 2012 07:33 AM
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