Magazine article Workforce Management

States Taking Hard Look at Pensions

Magazine article Workforce Management

States Taking Hard Look at Pensions

Article excerpt

Many state budgets across the nation are in trouble. And many experts point to state pension plans as the primary cause of the financial headaches.

The nation's state and local pension systems face a $4 trillion unfunded liability, or the gap between the assets each state has and what it promised workers at retirement. It's a gargantuan number, and many states are making this a top priority and working toward solutions. The figure comes from an October 2011 update by Joshua Rauh, a Northwestern University associate professor of finance. His original work is from a 2010 paper titled, Public Pension Promises: How Big Are They and What Are They Worth?

"In all my years in and around government, I cannot think of anything that is more threatening and more dangerous than the underfunded nature of our pensions across the country," former Pennsylvania Lt. Gov. Mark Singel said at a December 2011 conference held by the National Conference of State Legislatures.

In 2011, 29 state legislatures made significant retirement system changes, a 38 percent increase from 21 states in 2010, according to the National Conference of State Legislatures. Only six states made pension changes in 2009.

Movement has been slow but gradual, says Ron Snell, senior researcher at the NCSL. …

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