The Pew Center on the States, a non-profit foundation, released a report yesterday that placed the funding gap for public pensions at $1.38 trillion in the 2010 fiscal year. In other words, states were $1.38 trillion behind in terms of saving enough mone to cover retirement for their employees. That was an increase of $120 billion—9 percent—over the previous fiscal year.
“Pew’s report fails to give an accurate portrayal of the true debt that states are facing due to unfunded pensions,” Bob Williams, president of State Budget Solutions, said in a statement. “Even though the Pew report acknowledges a 38 percent liability increase in just two years using official numbers, the actual debt is much bigger and growing faster than official numbers show.”
Williams said the Pew report doesn’t factor in that pension funds are putting more money into riskier investments. “Ignoring this will set taxpayers up for a bigger catastrophe in the future,” he said.
These are some of the key findings from the Pew report:—Wisconsin was the only state that had fully funded its pension plan in 2010. New York’s was fully funded in 2009 and 94 percent funded in 2010, and it faced a $9 billion funding gap.
Pension plans represent more than half of the retiree benefit funding shortfall. Experts say that a healthy pension system should be at least 80 percent funded, according to the Pew Center on the States.—States have just 5 percent of the money needed to pay for their retirees’ health care and other non-pension benefits, such as life insurance. Seventeen states didn’t set any money aside to fund health care for retirees. New York has not funded $11 billion for retiree health-care costs.—Forty-three states cut pension benefits, increased employee contributions, or did both between 2009 and 2011. New York did both.
Comptroller Thomas DiNapoli weighed in on pensions today, saying in a statement that the Pew report “has again recognized the New York State and Local Retirement System as one of the best public pension systems in our country. Our commitment to responsibly manage the system and make required annual contributions has kept us on firm ground.” He oversees a $150.3 billion state pension fund, one of nation’s largest.
Widening Gap Factsheets_New York