Ms_Taggart wrote:
Quote:

mfadam wrote:
IL is leading the pack of state's in real trouble, but NJ is not far behind. They can only raise taxes so much - at some point they either need to cut govt expidentures or break the news that people won't get what they were expecting in retirement. There's only so much you can do when the money ain't there and the stock market isn't helping at all...

+1. I also think people fail to realize that when the retirement age (for social security) was set, the life expectancy was almost 20 years younger than it is today. So obviously defined benefit pensions are not sustainable unless they have changed over time with life expectancy (either put more money in or change the retirement age.)

In other words: It's easy to give a lifetime of retirement benefits when you expect the person to retire at 65 and to die at 67. It's not as easy now that many people are living to 85...

Financial Times:

[...] Unfunded pensions high on the agenda

Many states are rethinking core elements of their pensions systems, including retirement age, employee contributions and projected returns, as they struggle with budget deficits and investment losses from the financial crisis.

?The decline in public pension fund assets that started in fiscal 2008 is now contributing to significant budget challenges for US states as many of them are faced with having to increase their pension contributions even as federal stimulus funding dries up and before meaningful revenue recovery has taken hold,? analysts at Standard & Poor?s, the rating agency, warned yesterday in a report.

The latest data compiled by S&P, which covers 2008, shows that the mean funded ratio for the principal state pensions fell to 80 per cent from 83 per cent for 2007 and far below the 100 per cent recorded in 2000.

The true nature of the gap remains clouded by the fact that most public pension plans use what is known as ?smoothing? ? balancing gains and losses over a number of years, typically five ? and the rebounding of financial markets in the second half of 2009.

Still, S&P warns: ?The losses from 2008 are now translating to real budget pressure for the states. We believe this will continue for a while.?

The agency also expects ?significant? changes could be on the horizon related to accounting, reporting and how a government funds its pension obligations.

mfadam wrote:
IL is leading the pack of state's in real trouble, but NJ is not far behind. They can only raise taxes so much - at some point they either need to cut govt expidentures or break the news that people won't get what they were expecting in retirement. There's only so much you can do when the money ain't there and the stock market isn't helping at all...