Tags: jacob | wolinsky | Pension | Funds | reform | christie

Time Running Out to Save Our Pension Funds

By    |   Thursday, 21 Oct 2010 08:57 AM

One of the most critical issues facing our economy is the coming pension crisis. Pension funds nationwide are dangerously underfunded and could require a several trillion dollar federal bailout.

This is a serious issue which most politicians refuse to address for fear of losing the senior vote. It is also understandable that someone who was promised a pension shouldn’t have it cut when they are already retired.

One leader on this issue who should be commended in his action is New Jersey. Governor Chris Christie. When he came into office in March 2009, the state’s pension fund was a mess.

New Jersey’s real pension deficit reportedly was more than $174 billion. The reason the pension deficit got so large was because previous New Jersey governors assumed higher rates of return, increased benefits and cut required contributions.

Christie sprung immediately into action against the teachers union, who actually prayed for his death. He was able reduce the amount that new workers would receive when they retired.

Christie realizes this isn’t enough and recently unveiled a much more ambitious plan which could really put the New Jersey pension fund in fiscal order. Christie proposed contribution levels of 8.5 percent, raising the age for special early retirement to 30 years of work from 25 years, ending adjustments for inflation and raising the regular retirement age to 65.

The unions have already attacked Christie’s latest plans. He will no doubt face heavy opposition. However, if he is able to get his plan passed, it will save the state billions of dollars.

This might not even be enough to put pension funds in balance. The bulk of liabilities are promises to people who are retired or still working.

Some states have already tried to cut benefits to workers or people already retired. All of these plans have gone to court to determine their legality. I hope the court sides with the states.

Chris Christie is leading the way. He must go a step further and deal with people working and retired. In fairness to the people working or close to retirement, a compromise might be to decrease their benefits much less than those of new workers.

Whatever the outcome is in New Jersey, or any other state, one thing is certain: If serious pension reforms aren’t soon enacted, the whole nation is in serious trouble.

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Wolinsky
One of the most critical issues facing our economy is the coming pension crisis. Pension funds nationwide are dangerously underfunded and could require a several trillion dollar federal bailout. This is a serious issue which most politicians refuse to address for fear of...
jacob,wolinsky,Pension,Funds,reform,christie
390
2010-57-21
Thursday, 21 Oct 2010 08:57 AM
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