Pensions across the country are habitually underfunded. Recent reports released from the Center for State and Local Government Excellence show that state and local pension plans are only about 74% funded and have unfunded liabilities of about $1.4 trillion. They also found that 20% of pensions are under 60% funded. This is appalling when it is put into context that not only are the pensioners going without, but the extra costs falls on tax payers around the country.
Costs are high and some states seem to be neglecting the crisis.
The good news is there are states who have taken meaningful steps to protect their pensioners and address the unfunded liabilities. For example, Pennsylvania and Michigan should be seen as leaders in the pension world – they are continuing the fight to give pensioners what they deserve and protect the retirement fund they have worked their entire lives for.
In Pennsylvania, which had amassed $70 billion in unfunded pension liabilities, Governor Tom Wolf signed into law a pension bill that will change retirement plans. Days later, in Michigan, lawmakers passed a similar pension plan that gives pensioners the opportunity to control their own finances.
The problem is that states like New York, California, and Illinois have not only ignored their pension plan debt – but they’ve actively work against fixing their underfunded pensions. In contrast to Pennsylvania and Michigan, these states have introduced bills that both worsen the debt and ignore their obligations to the pensioners. These pieces of legislation that will only cut funding to pension plans will lead to dangerous financial outcomes.
We cannot continue to risk the futures of our educators, laborers, and many other entities who have built and bettered our communities with the expectation of a comfortable financial future. States like California, New York, and Illinois need to follow in the footsteps of Pennsylvania and Michigan – by putting their pensioners, taxpayers, and state economy first.