pensions

In these trying times coping with the Coronavirus, and its huge impact on businesses and employment, the younger generations have been set up to pick up some the costs of the defined benefits that their parents and grandparents voted in for themselves.

Unless pension funds around the nation continue to earn 7% or more per year on their investments, it’s likely that taxpayers will be on the hook for trillions of dollars of promises to government unions.

Everyone knows that Social Security and Medicare are underfunded. They can only provide the benefits they have promised by borrowing from future taxpayers who are obligated to pay for them.

A report issued by Wirepoints shows that the cause of the Illinois public-sector pension crisis has been the staggering increase in the benefits promised to public-sector employees rather than shortfalls in funding of pension systems by taxpayers.

During the city of Detroit’s bankruptcy, the state-appointed administrator sought to cut pension payments for thousands of retired city workers in violation of Michigan’s state constitution. 

Americans seem to have a problem saving for retirement.  This problem has implications for our own lives and for employer-provided pension plans.

Unless lawmakers in local and state governments act now, the problem of underfunded public pension plans will come ashore in the foreseeable future, hitting taxpayers with tax hikes and crippling debt, a true financial hurricane caused by decades of elected officials’ poor planning.

In today’s edition of The Heartland Daily Podcast, we listen in to an Emerging Issues Forum conference call hosted by MaryAnn McCabe, State Government Relations Manager for The Heartland Institute. The conference call features Brandon Arnold, Executive Vice President of the National Taxpayers Union.

South Carolina lawmakers have undertaken reforms to address some of the serious issues with their state’s pension system, but major changes are still needed to prevent future budget problems. In 2012, the state increased employee and employer contribution rates for the South Carolina Retirement System (SCRS), the state’s public pension fund. The increase affected current members as well as new hires. The 2012 reforms also reduced the expected rate of return for pension investments and reduced the minimum cost-of-living benefit increase. In 2000 and 2002, the state created optional defined-contribution plans for existing and new state and local government employees and teachers.

In this episode of The Heartland Institute’s weekly Budget & Tax News podcast, managing editor and research fellow Jesse Hathaway talks with Mercatus Center at George Mason University’s State and Local Policy Project scholar Adam Millsap about a new study ranking each US state’s financial health, based on factors such as short- and long-term debt, fiscal obligations, unfunded pensions and entitlement spending.