Understanding the true cost of state and local pension - AEI
The financial health of defined benefit pension plans for state and local government workers is a matter of policy concern and analytical contention. Pensions have come under increased scrutiny as funding levels have dropped and required contributions have risen. According to standard actuarial accounting, the average public pension was 76 percent funded in 2009, down from 95 percent in 2001. Likewise, annual required contributions (ARCs) -- the costs of benefits accruing in a given year plus the amortization (generally over a 30-year period) of unfunded liabilities from prior years -- were over $74 billion in 2009, up from around $29 billion in 2001, with further increases likely in future years. Overall, public pensions reported underfunding of $660 billion as of mid-2009, the most recent date for which complete information is available.… Current pension accounting rules rely on a potential taxpayer bailout
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