A pensions time bomb spells disaster for the US economy

[FarCenter]

Underfunded government pensions to the tune of $1.3 trillion, with a gap that just can’t be filled, is the ticking time bomb facing the US economy, which faces dramatic cuts in public services and potentially riots reminiscent of Athens six years ago.

Danielle DiMartino Booth is the tough talking former Federal Reserve advisor and President of Money Strong, with an insider’s perspective on finance. As she picks apart the danger signs with the US on the precipice of recession, it’s the impending pensions crisis that’s really keeping her awake at night.

With so few people privy to what little recovery we’ve had and given how stretched pensions are, checks are going to have to be written from Washington sooner than you think, DiMartino Booth told Real Vision TV in an interview.

“The Baby Boomers are no longer an actuarial theory,” she said. “They're a reality. The checks are being written.”

http://www.businessinsider.com/a-pensions-time-bomb-spells-disaster-for-the-us-economy-2016-12

[GummyBearz]

1. Oh please

Stop the hysteria. Everyone knows pensions are a magical entity that poops out money every month for eternity

[elleng]

2. 'state and municipal obligations'

FOOLS (MUCH worse than that) for failing to attend to these.

[yeoman6987]

3. Cities need to fix this

They spent the money and now better find it somewhere else.

[elleng]

4. Damn right; they sure as well SHOULD,

but if the deficits are substantial and long-lasting, they'll have problems; revenues have to come from residents and businesses (who should have been assessed all along.) NOT good.

[a kennedy]

5. I was part of that promised benefit....."we'll pay your health premiums for no raise this year"

oh yah, that was the benefit for no "cash" raise for years they said this, and now??? Right they can't pay us now in retirement either.

[yeoman6987]

8. Infuriates me to know end.

I actually hear some younger workers say they are glad for 401K due to stories like this. So frustrating. I don't get a city or state pension nut this still pisses me off. One reason for the pension was due to lower salaries throughout the career as a civil servant. This group gets fucked two ways of not more.

[mythology]

9. In many cases, the issue isn't that the money was spent

It's that the predictions were made on faulty expectations. People are living longer and companies go under or had their industry disappear or automation replaced future workers and health care costs have skyrocketed and all of a sudden, there aren't enough current employees to pay for retirees.

For state and local governments, the same pressures of fewer employees and skyrocketing health costs apply, plus the Republican obsession with cutting taxes at all costs.

[PoindexterOglethorpe]

6. I recall reading many years ago,

at least as far back as the 1980's, that unfunded state and municipal pensions were a ticking time bomb. Even then they were being unfunded, and that eventually there would be an enormous problem.

Just as many corporations couldn't be bothered to fund their pensions, some of which declared bankruptcy and then shifted the burden over to the PBGC (Pension Benefit Guaranty Corporation), which paid out about 30 cents on the dollar of pension, the same will happen down the road with government pensions.

It's not as though the numbers of those in the pension plans and the foreseeable dates when they'd retire were a giant surprise.

[edhopper]

7. And Social Security can't be counted on

If Trump and Ryan have there way.

[Cicada]

10. Five percent of a single year's GDP is a disaster?

This shortfall is about pension payments which will be payable over 20 years or so. We need an extra 1.3 trillion dollars to make up that shortfall. In 20 years we will generate more than 400 trillion in economic output even if we have zero economic growth. Economic growth will add very conservatively another 80 trillion.

I don't see this as a disaster, personally.

[TheBlackAdder]

11. Companies will just fuck over their retired, like how GE fucked over my uncle 2 yrs after retirement

.


They'll declare some hardship and then skive off on their obligations, leaving life-time employees to starve.


.