Most people don’t have pensions to look forward to in retirement any more. But don’t be jealous of those who do—their pensions are seriously fucked.
If you are, say, a state employee, a teacher or something, and you have a pension coming to you after decades of hard work, my advice to you is: don’t read any further here. Also don’t think about your pension at all. Think about anything else! Keep thinking about other things for several years! Maybe somehow in that time your pension fund will hit the Powerball!
The FT today surveys the current state of public pensions in America. The current state is: bad. (Meaning, the same as ever.) Public pensions do not have the money they need to be able to pay what they owe to the people who have pensions coming to them. Nor do they have magical investment plans that will enable them to fill that gap, unless they get really lucky on roulette. Instead, if public pensions want to survive, they will have to get more money from the cities and states that run them, which means those places will have to cut budgets in other areas and raise taxes. And the lack of will of politicians to cut budgets in other areas and raise taxes is exactly what got pensions in this fucked up predicament in the first place.
Even the most optimistic estimates by analysts indicate that pensions will collectively go hundreds of billions of dollars deeper into the hole just this year. The “collective deficit” of US public pensions stands at $1.7 trillion and rising. The overall picture: again, bad.
A study by Wilshire Associates, the consultancy, published earlier this month, showed that state-sponsored pension plans in the US had just 73 per cent of the assets they needed to pay current and future retirees in mid-2015, down from 77 per cent in 2014. In 2007, this was 95 per cent.
This is 100% due to political cowardice and/ or incompetence.
Sorry about those pensions, pensioners!