$2 trillion in the hole


Thanks, Wall Street! Time to expand Social Security:

The 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities, showing that investment returns can’t keep up with ballooning obligations, according to Moody’s Investors Service.

The 25 biggest systems by assets averaged a 7.45 percent return from 2004 to 2013, close to the expected 7.65 percent rate, Moody’s said in a report released today. Yet the New York-based credit rater’s calculation of liabilities tripled in the eight years through 2012, according to the report.

“Despite the robust investment returns since 2004, annual growth in unfunded pension liabilities has outstripped these returns,” Moody’s said. “This growth is due to inadequate pension contributions, stemming from a variety of actuarial and funding practices, as well as the sheer growth of pension liabilities as benefit accruals accelerate with the passage of time, salary increases and additional years of service.”

U.S. states and cities are contending with underfunded worker retirement systems. The 18-month recession that ended in June 2009 wiped out asset values and forced cuts to contributions. Now, liabilities are crowding out spending for services, roads and schools.

One thought on “$2 trillion in the hole

  1. And who said Capitalism doesn’t work? We can blame the politicians for this mess. You can’t give away in pensions outlays more than you’re taking in in contributions. The politicians consciously sold out the “next generation” to keep labor peace and to fool everyone into believing that the “miracle of Capitalism” would save the day. What saves the day is proper planning. Planning can be easily accomplished, and in most cases accomplished better, by using a Socialist and eventually a Communist economic model. As long as corruption is vigorously suppressed. Any good Socialist worth their weight would be calling for the Social Security system to be expanded ASAP.

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