U.S. public pensions need more than investment windfall
It’s no secret that pension funding is a concern in municipalities and states around the country, but this Reuters piece, published in the Chicago Tribune, presents a bit of a balanced view about how dire (or not) the situation may be.
Indeed, there is evidence that the overall health of pension systems is brightening. A report released by the Federal Reserve last week said liquidity of pension funds has improved.
…many are still struggling with shortfalls. In some cases, they have worsened as state contributions fail to keep pace with what is needed to pay beneficiaries. … Roughly half of U.S. state pension plans have worrying gaps between what they have promised retirees and the funds on hand to pay benefits, according to most analyses.
However the pension funding situations play out across the country during the next few years, it’s clear that Detroit is setting precedent. Emergency Manager Kevyn Orr’s Plan of Adjustment calls for changes in the governance and administration of city employee plans. It remains to be seen to what extent those will be negotiated or whether they will be part of a forced settlement in the bankruptcy case.