Wednesday, February 09, 2011

Unfunded Pension Liabilities

Many states are in serious financial trouble because of their lavish and underfunded pension plans for government employees. Our plans are fairly generous, and we have a large number of public employees relative to our population size compared with other states.

Most of the trouble is in the teacher retirement plan pension fund and the pension fund for state employees. Our annual state budget is about $4.5 billion dollars. These two pension plans are underfunded by a total of $20 billion dollars. The Teacher's pension is only 46% funded, leaving a liability of $14 billion. The public employee's plan is 48% funded, with a shortfall of $6 billion.

Remember that our state Constitution forbids our office holders from loading debt on the people without a vote of the people agreeing to take on that debt. Despite this, we find ourselves owing over four times the entire annual budget of the state to teachers and state employees.

1 Comments:

Blogger Mark Moore (Moderator) said...

This is not just an Arkansas problem, it is happening across the country.

The elites are desperate to destroy the dollar in order to avoid outright default on these obligations. They are defending the base of their own pyramid when they protect the pensions of government workers, but they overpromised. They are going to cheat the lower rung retirees in their own system.

Since many of these plans are indexed to inflation, they are going to lie about the true inflation rate while debasing the currency. In Arkansas, the teacher's plan is adjusted to inflation, but only to a max of 3% a year. That won't keep up with the on-purpose inflation that is soon to come.

9:42 AM, February 09, 2011  

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