|Eintime Conversion for education and research 04-08-2008 @
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Posted Dec. 18, 2007
Study: States 27% short in pension, benefit funding
COURTESY PEW CENTER ON THE STATES
PHILADELPHIA U.S. states have nearly a 27 percent shortfall in funding required to meet the $2.73 trillion in pension and benefits payments they will owe retired workers over the next 30 years, according to a report today from the Pew Center on the States.
It is really a situation where states have been making promises that they have to pay for tomorrow and not putting the money aside today, Susan Urahn, the centers managing director, told Bloomberg News. The center part of The Pew Charitable Trusts was established to review state policies and promote nonpartisan solutions.
The report Promises with a Price, by analysts Katherine Barrett and Richard Greene found that pension payments will cost the states an estimated $2.35 trillion over the next three decades, while benefits will cost them an estimated $381 billion over the same period. But, although the states have set aside $2 trillion for pension payments, or 85.1 percent of what will be required, they have allotted only $11 billion for benefits, or about 3 percent of anticipated costs.
Rising health care costs are contributing to the problem, as is the aging of the population, the report said. Social Security Administration figures indicate the number of people 65 and older is expected to increase 80 percent from 2010 to 2030, to about one in every five U.S. residents.
Performance varied widely among states, with only six Arizona, North Dakota, Ohio, Oregon, Utah and Wisconsin on track at the end of FY 2006 to have fully funded their non-pension [retirement benefit] promises, the study found.
Rhode Island was ranked among the top performers in pension funding, with $5.5 billion set aside toward a pension bill of $9.8 billion as of fiscal 2006. But on benefits, the state was ranked as below par, with nothing set aside toward a $700 million anticipated bill a plight it shared with the nations five largest states, the center found.
To their credit, states have socked away enough to cover about 85 percent of the pension bill, the report said. But there is very little put aside for non-pension benefits.
Additional information, including the full report Pensions Report: Promises with a Price, is available from The Pew Charitable Trusts at www.pewtrusts.org.
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04-08-2008 @ 12:48:14