…There is an obscure, almost hidden problem in the financial system: public employee pension funds across America are suffering extensive market losses and putting the retirements of the workers they are supposed to protect at high risk. The pension systems of many states are a ticking time bomb, especially Kentucky.
This version of the original article, by Jake Zamansky, has been edited* here by munKNEE.com for length (…) and clarity ([ ]) to provide a fast & easy read.
According to a MarketWatch report:
- About half the states have pension plans that are 70% funded or much worse…
- It is estimated that in five years or so, some of those states will likely have to either cut their services, the equivalent of a state bailout, or they will need a federal bailout – and that’s a problem for all taxpayers…
- The pension systems of many states are a ticking time bomb, especially Kentucky.
- the Kentucky Retirement System has an estimated $36 billion deficit as a result of incompetence and gross mismanagement and hefty fees…
- Kentucky lost $1.2 billion in the 2001 dotcom bubble and another $2.8 billion in the 2008 financial crisis…
- Want your very own financial site? #munKNEE.com is being given away – check it out!
To say that this is taking a toll on pensioners is an understatement. “The pension benefit was a big deal,” said one Kentucky police officer. “I knew that after 20 years of a career, my wife and I would have health insurance and I would have some kind of pension.” Now he’s not so sure.
Kentucky is not alone. Other states and their workers are clearly at risk. Perhaps the worst is…Puerto Rico’s Employee Retirement System [which] is over 90% unfunded and has a debt of over $45 billion. Making matters worse, much of the now defaulted debt was sold to retail investors…[who] have filed numerous investment fraud lawsuits to recover losses on those Puerto Rico pension bonds.
It’s as clear as day: America’s public employee pensions are a ticking time bomb. The U.S. public pension sector must wake up and work on a solution with their legislators and federal agencies so that they don’t become the next Kentucky or, even worse, the next Puerto Rico.
(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)
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