Texas employee pension fund could run dry without fixes
Reversing the downward spiral of Texas’ state employee pension fund could require significant increases to how much workers and taxpayers kick in as well as a possible reduction to future retirement benefits.
The $23 billion Employees Retirement System of Texas will run out of money to cover promised pension benefits by 2052 if nothing changes, the fund’s actuarial consultants reported recently. The fund’s 321,000 members include state workers (outside of higher education), elected officials and retirees.
Extending the life of the fund beyond that point would call for a one-time $4.5 billion infusion or gradually increasing the shared contribution rate to 20 percent of payroll. The contribution rate is currently 14.6 percent with the state picking up a little more than half.
Another option would be to reduce pension benefits for future hires by 90 percent even while they would be on the hook for the same level of contributions.
More at http://www.mystatesman.com/news/news/texas-employee-pension-fund-could-run-dry-without-/ncLt3/ (subscription required).
[font color=green]The ERS went from having nearly all of their liabilities funded to only having 77% of liabilities funded. It should also be noted that in the fourth paragraph above, the statement most likely should say that pension benefits for future hires would be reduced to 90% instead of reduced by 90%.[/font]