Today’s Washington Post talks about the real problems that state and local pension systems face in light of the massive losses of the last downturn. The story talks about the stark choices facing pension systems throughout the country.
The upheaval on Wall Street has deluged public pension systems with losses that government officials and consultants increasingly say are insurmountable unless pension managers fundamentally rethink how they pay out benefits or make money or both.
Within 15 years, public systems on average will have less half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade.
After losing about $1 trillion in the markets, state and local governments are facing a devil’s choice: Either slash retirement benefits or pursue high-return investments that come with high risk.
The story is a good one that details the severe problems facing cities and towns. With steep pension losses Massachusetts communities will be faced with huge bills that will force them to decimate existing services in order to fund these obligations.
Read the Washington Post story here.