Lewis was a participant in the Central States Pension Plan, which is now underfunded. It could have a devastating impact on those already receiving benefits, and have been depending on promises made decades ago. Twenty states have pension plans that are less than two-thirds funded, and five states have pension plans that … "The truth about pension plans is that they are promises -- not guarantees," said © 2020 Money Morning All Rights Reserved.
Many state government-run pension plans are running short of the money needed to pay 100% of the retirement benefits that state politicians have promised to the teachers, police officers, firefighters, and other employees of state governments. When Lewis died of a stroke a few years ago, his wife took a 40% cut to her joint survivor benefit. Pension plans in Wisconsin and South Dakota are in the best shape, with funded ratios of 103 and 100 percent, respectively. Going by this measure, the five states worst off include:Kentucky’s 4.4 million residents, which ranked the worst by its percentage of pension liability that has been funded, would have to each come up with $9,632 to fully fund their state government employees’ pensions.Worse, those costs can be expected to rise since politicians in the state’s legislature Truly fixing the problem will mean resetting the level of state government employee pension benefits to fiscally sustainable levels, which state government employees have so far
Unions, employers and the federal government have finally come up with an answer for the nation's underfunded pension plans, many of which are headed for bankruptcy.The proposal would erase the guarantees created under the 1974 Employee Retirement Income Security Act (ERISA) and allow underfunded pension plans to reduce monthly benefits for both future and current retirees.That change would affect the more than 10 million people who participate in defined benefit pension plans operated by companies, unions, or both. July 24, 2020 - Unions, employers and the federal government have finally come up with an answer for the nation's underfunded pension plans, many of which are headed for bankruptcy. In October 2018, Bloomberg's Danielle Moran tallied the total liabilities and the funded portion that applies to each state’s public employee pension funds, finding that five states had funded less than 50% of the cost needed to pay for their promised state public employee’s pension benefits:Another way to measure the shortfall is to calculate the amount of money that each individual state resident would have to cough up to fully fund the cost of providing state government employees with the retirement benefits promised to them by state politicians. The chart below shows those figures as calculated from the 2018 pension funding data provided by Bloomberg and The dollar amounts shown are how much every man, woman, and child in each state would have to pay today to put each state public employee pension fund on track to pay out promised benefits to state government workers in full after they retire.The residents of two states have good news. Protected by copyright of the United States and international treaties. In other words, the money needed to cover current and future retirements is … Worse, those costs can be expected to rise because politicians have failed to reach a compromise.Craig Eyermann is a Research Fellow at the Independent Institute. Tennessee is right behind with a 97 percent ratio. An underfunded pension plan is a company-sponsored retirement plan that has more liabilities than assets. As members of the baby boom generation age into retirement — approximately 10,000 Americans turn 65 every day — more and more are relying on pension … This work is licensed under a Creative Commons Attribution 4.0 International License, except for material where copyright is reserved by a party other than FEE.Please do not edit the piece, ensure that you attribute the author and mention that this article was originally published on FEE.orgThis work is licensed under a Creative Commons Attribution 4.0 International License, except for material where copyright is reserved by a party other than FEE.
Worse, those costs can be expected to rise because politicians have failed to reach a compromise. Many state government-run pension plans are running short of the money needed to pay 100% of the retirement benefits that state politicians have promised to the teachers, police officers, firefighters, and other employees of state governments.How short depends on the state and how you measure the amount of the shortfall.