Source: City Journal
“The second-longest bull market in American history hasn’t stopped the deterioration of state and local pension funds, whose unfunded debt has almost quadrupled – by their own accounting – from about $360 billion in 2007 to $1.4 trillion today. Having relied on overly optimistic and inaccurate financial assumptions for decades, public pension administrators are now forced to acknowledge that the systems owe much more than previously thought. Even as local governments struggle to pay for this debt, it keeps growing. Concerned that mortality tables for private-sector workers don’t accurately reflect what’s going on among retired government employees, the Society of Actuaries conducted a three-year study of public-pension retirement systems, evaluating approximately 580,000 deaths between 2008 and 2013, across 78 public-pension plans. The study found that, on average, female teachers were living 90 years, while male teachers lived 87.7 years. By contrast, the Social Security Administration’s life expectancy tables for the U.S. population show that men who reach 65 can expect on average to live 84.3 years, and women 86.7 years….Longer lives for public employees will mean higher costs, and not just for pension plans. Many state and local governments promise to pay for the health care of their retired workers, but few have enough money set aside to do so….Consequently, the amount of money that local governments must pay into the system has been rising steadily. As the latest study on mortality rates shows, that trend is going to continue.”
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