Forbes: US State, Local Pensions Funded at Half Levels of Other Countries
Sunday, 15 May 2016 03:06 PM
U.S. state and local government pensions, which operate under the loosest accounting standards in the public pension world, are not nearly as well-funded as most public employee pensions in other developed countries, Forbes.com reported.
“On an apples-to-apples basis, U.S. public employee plans simply set aside substantially less money to fund each dollar of promised benefits than do public employee pensions in other OECD countries,” Forbes.com contributor Andrew Biggs explained. “When the stakes are this high, last isn’t a good place to be,” he said.
Biggs explained that a 2011 Organization for Economic Co-operation and Development (OECD) study "showed public employee pensions in other countries use more conservative assumptions and more demanding funding requirements than state and local pensions in the U.S."
The OECD’s 2011 study compared government employee retirement plans in eight countries (the U.S., Canada, the Netherlands, Sweden, the United Kingdom, Australia, Norway and France).
“But the OECD study performed a second useful task: In addition to merely listing the differences in accounting assumptions used by different countries’ public pensions, the OECD authors re-valued each pension using consistent standards so their funding levels could be compared on an apples-to-apples basis,” Biggs said.
“What do these figures mean? That nearly all of the developed countries analyzed by the OECD contribute a lot more to funding public pension liabilities than do U.S. state and local plans. The Dutch, Swedish and French plans have set aside roughly twice as much money per dollar of promised retirement benefits as have U.S. state and local pensions. Twice as much.”
With seemingly a constant steady drumbeat of dismal pension news, it’s hardly surprising that Americans are breaking the record for working past age 65.
"Almost 20 percent of Americans 65 and older are now working, according to the latest data from the U.S. Bureau of Labor Statistics. That’s the most older people with a job since the early 1960s, before the U.S. enacted Medicare," Bloomberg reported.
"Because of the huge baby boom generation that is just now hitting retirement age, the U.S. has the largest number of older workers ever."
When asked to describe their plans for retirement, 27 percent of Americans said they will “keep working as long as possible,” a 2015 Federal Reserve study found. Another 12 percent said they don’t plan to retire at all, the report said.
(Newsmax wire services contributed to this report).
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Read more: Forbes: US State, Local Pensions Fund at Only Half Levels of Some OECD Countries
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