by In a Hoover Institution Essay, Joshua Rauh describes the extent to which US states and communities under fund public sector pensions. Even under states’ own disclosures and optimistic assumptions about future investment returns, assets in the pension systems will be insufficient to pay for the pensions of current public employees and retirees. Taxpayer resources will eventually have to make up the difference. Despite the implementation of new Governmental Accounting Standards Board (GASB) guidelines, most public pension systems across the United States still calculate both their pension costs and liabilities under the assumption that their contributed assets will achieve returns of 7.5–8 percent per year. But new GASB disclosures allow Rauh to estimate the size of the funding gap. He
Topics:
Dirk Niepelt considers the following as important: Discount factor, Discounting, Implicit debt, Notes, pension, Public sector, Unfunded liability
This could be interesting, too:
Dirk Niepelt writes “Governments are bigger than ever. They are also more useless”
Dirk Niepelt writes The New Keynesian Model and Reality
Dirk Niepelt writes Urban Roadway in America: Land Value
Dirk Niepelt writes A Financial System Built on Bail-Outs?
In a Hoover Institution Essay, Joshua Rauh describes the extent to which US states and communities under fund public sector pensions.
Even under states’ own disclosures and optimistic assumptions about future investment returns, assets in the pension systems will be insufficient to pay for the pensions of current public employees and retirees. Taxpayer resources will eventually have to make up the difference.
Despite the implementation of new Governmental Accounting Standards Board (GASB) guidelines, most public pension systems across the United States still calculate both their pension costs and liabilities under the assumption that their contributed assets will achieve returns of 7.5–8 percent per year.
But new GASB disclosures allow Rauh to estimate the size of the funding gap. He finds
unfunded accumulated benefits of $3.412 trillion under Treasury yield discounting. These are the unfunded debts that would be owed even if all plans froze their benefits at today’s promised levels.