The pension mess persists

Joe Wiesenthal and Megan McArdle say, we’re in trouble. Yes we are.

Megan McArdle:

This is not, it should be emphasized, exclusively a problem of public sector pensions; private firms are also underfunded.   But the scale is vastly different.  According to the Pension Benefit Guaranty Corporation, which regulates and insures pensions, the total deficit in private plans covering about 34 million workers was a little over 10 billion as of September 2008.  That’s almost certainly multiplied quite a bit since then.  But the current underfunding in public plans, which cover about 22 million workers, seems to be something north of a trillion dollars.  And they’re not insured.

The funds that are responsible are a different sort of headache; they’ll be slapping heavy levies on local school districts and governments to shore up their capital.  That will be a nasty burden on strapped local governments, particularly in places that are already in decline.  My mother’s hometown in Western New York now sees its local fiscal picture vary heavily with the financial industry 350 miles away because of teacher pensions.

1 Comment

Filed under Uncategorized

One response to “The pension mess persists

  1. anonymous

    Not many bright people ever have assumed job security or pensions or Social Security or Medicare…even back in ’60s or ’70s…recall the periodically unemployed Stanford PhD-educated engineers in the ’70s aerospace/defense recession, pre-Silicon Valley?

    Every man for himself….one has relative freedom in choice of college, career, preventive health, savings vs consumption, no. of dependents, etc…and one should live w/consequences of those individualistic strategic decisions and risks