Cities, Counties & States Facing Bankruptcy Due to Underfunded Pensions

Do you know that when Democrats passed Social Security, it was only meant to be a short-term supplement to help retirees with pensions? The reason it was short-term is that at the time, the average senior only lived about 5 years after retirement. The main income for most seniors at the time were their pensions.

Over the years, pensions have become a thing of the past because many companies can no longer afford to fund them. Coupled with the fact that many retirees are now living 15-20 years after retiring and most no longer have pensions, you can understand why so many are forced to continue or go back to work because they can’t live on Social Security alone.

I recall getting advice from a number of people over the years to try to get a government job – whether city, county or state because of job security and the pensions.

I have family and friends who have retired from city or state jobs. Their pensions are very important to them, but according to a recent report, they may find themselves in the same boat as those described above, and I know that for some of them, it will force them to go back to work in their senior years.

“Jonathan Williams of the American Legislative Exchange Council (ALEC) tells OneNewsNow that pension liabilities represent an “existential threat” to states and local governments for the next 20 to 30 years but the issue isn’t getting noticed.”

“‘And if the media doesn’t pay attention to this,’ he warns, ‘state legislators are going to have to take the bull by the horn and draw attention to it themselves’.”

“ALEC releases an annual estimate of unfunded pension obligations in a report called Unaccountable and Unaffordable. The most recent publication shows the numbers are massive — and growing.”

“‘This year, every man, woman, and child in America owes more than $18,000 to pay off the unfunded pension obligations just in state-overseen plans at the 50-state level,’ explains Williams. ‘The number overall is just about $6 trillion that state and local governments owe on these unfunded pension obligations’.”

“He stresses that this is not a red state versus blue state issue, though he contends that conservative states have done a better job of tackling the issue.”

Some areas are already seeing the effects of underfunded government pensions. In Kentucky, thousands of teachers have periodically descended upon the state capital in protest over the revamping of their pension plans. Kentucky faces a huge shortfall, as many other states are finding out. Gov. Matt Bevins has tried to come up with workable solutions in order to provide any kind of retirement program for teachers, but teachers want their fat pensions and don’t want to even consider any other alternative.

What teachers are unwilling to admit is that there are only four alternatives. Have the state pass a huge tax increase to pay for pensions; accept the alternative plans that Bevin has offered; face the fact that many won’t have any pension due to a lack of money; or, the city, county or state declare bankruptcy like Detroit and Puerto Rico did, which leaves no pensions for anyone. The longer cities, counties and states put off the pension problems, the harder it will be to salvage any kind of retirement system that will satisfy workers. It’s a difficult and painful situation with no really good answer. That security of a government job and pension isn’t that secure any longer.

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