U.S. state pensions face overhaul in bad economy
Reuters, August 7th, 2009
When Illinois was
facing at least $55 billion in unfunded pension liabilities
back in March, Governor Pat Quinn outlined what he called "bold
reform" for the state's retirement system.
In a move now being replicated in other cash-starved
states, the governor proposed a two-tier system, leaving
benefits for current workers untouched, but imposing changes
such as a higher retirement age and capping cost-of-living
increases on new employees.
That would allow the state to reduce its pension liability
by $162 billion over the next 36 years, a substantial saving at
a time when revenue is being decimated by the recession and the
state is struggling to balance its budget.
Quinn's reform effort failed, but lawmakers agreed to
create a pension system modernization task force charged with
making recommendations by November.
Illinois is not alone in trying to reduce its huge
liability.
The National Association of State Retirement Administrators
found a nearly $443 billion collective unfunded liability for
the 125 state, local government, and teacher pension funds in
its most recent survey.
The situation is likely to worsen as the recession punches
holes in budgets nationwide and causes big investment losses
for defined-benefit pension plans that pay out a fixed income.
Read more of this article.About Reverse Mortgages: Learn all about reverse mortgages at NewRetirement.com
Professional Financial Advisors: Find out what a financial advisor can do for you at NewRetirement.com.