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State Retirement Systems Under Funded

State Retirement Systems Under Funded

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Published by rebeltraders
Pew Center releases the latest study on the health of the public pension system.
Pew Center releases the latest study on the health of the public pension system.

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Published by: rebeltraders on Feb 19, 2010
Copyright:Attribution Non-commercial


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The trillion dollar
Underunded stateretirement systemsand the roadsto reorm
Pew Center n the States
 The Pew Center n the States is a divisin  The Pew Charitable Trusts that identies and advanceseective slutins t critical issues acing states. Pew is a nnprt rganizatin that applies a rigrus,analytical apprach t iprve public plicy, inr the public and stiulate civic lie.
Susan K. Urahn, anaging directrPRojECT TEAm
Research Consultants
Katherine Barrett and Richard Greene, Pew Center n the States’ Senir Advisrs
 This reprt beneted treendusly r the insights and epertise  tw eternal reviewers: RnaldSnell  the Natinal Cnerence  State Legislatures and Keith Brainard  the Natinal Assciatin State Retireent Adinistratrs. These eperts prvided eedback and guidance at critical stagesin the prect. While they have screened the reprt r accuracy, neither they nr their rganizatinsnecessarily endrses its ndings r cnclusins.We thank ur Pew clleagues—Sean Greene, Natasha Kallay, Lauren Labert, mlly Lyns, matt mrse,jasn Newan, Gita Ra, Andy Snyder, Daniel C. Vck, jessica Willias and Denise Wilsn—r theireedback n the analysis. We thank Sarah Hlt, julia Hppck, Andrew mcDnald, matthew mulkey,jennier Peltak and Gaye Willias r their assistance with cunicatins and disseinatin. We alsthank Kathleen Litzenberg r her editrial assistance and jshua Rvner r his assistance with datacllectin. Finally, we thank the any state cials and ther eperts in the eld wh were s generuswith their tie, knwledge and epertise.Fr additinal inratin n Pew and the Center n the States, please visit
. This reprt is intended r educatinal and inratinal purpses. Reerences t specic plicyakers r cpanies have been included slely t advance these purpses and d nt cnstitute anendrseent, spnsrship r recendatin by The Pew Charitable Trusts.©2010 The Pew Charitable Trusts. All Rights Reserved.901 E Street NW, 10th Flr 2005 market Street, Suite 1700Washingtn, DC 20004 Philadelphia, PA 19103
 Team Leaders
Nancy Y. AugustineDavid DraineStephen FehrKil Huh
 Team Members
Ann ClkeLri Grangematt mcKillpmrgan Shaw
Design and Publications Team
Evan PtlerCarla Urina
February 2010Dear Reader: A $1 trillion gap. That is what exists between the $3.35 trillion in pension, health care and otherretirement benets states have promised their current and retired workers as o scal year 2008 andthe $2.35 trillion they have on hand to pay or them, according to a new report by the Pew Centeron the States.In act, this gure likely underestimates the bill coming due or states’ public sector retirementbenet obligations: Because most states assess their retirement plans on June 30, our calculationdoes not ully refect severe investment declines in pension unds in the second hal o 2008 beorethe modest recovery in 2009. While recent investment losses can account or a portion o the growing unding gap, manystates ell behind on their payments to cover the cost o promised benets even beore the GreatRecession. Our analysis ound that many states shortchanged their pension plans in both goodtimes and bad, and only a handul have set aside any meaningul unding or retiree health care andother non-pension benets.In the midst o a severe budget crisis—with record-setting revenue declines, high unemployment,rising health care costs and ragile housing markets—state policy makers may be tempted toignore this challenge. But they would do so at their peril. In many states, the bill or public sectorretirement benets already threatens strained budgets. It will continue to rise signicantly i statesdo not bring down costs or set aside enough money to pay or them.The good news? While the economic downturn has exposed serious vulnerabilities in states’retirement systems, it also appears to be spurring policy makers across the country to considerreorms. This report illustrates that a growing number o states are taking action to change howretirement benets are set, how they are unded and how costs are managed.Retirement benets are an important part o how states can attract and retain a high-caliberworkorce or the twenty-rst century—and the bill coming due or these promises is anincreasingly crucial issue aecting states’ scal health and economic competitiveness. Later thisyear, Pew will release a study o cities’ public sector retirement benet obligations and their impacton states. And in the coming months, we will oer additional research on states’ budgets andeconomies—rom the main actors driving scal stress to policy options that could help statesweather the storm.Sincerely,Susan UrahnManaging Director, Pew Center on the States

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