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Massive Pension Shortfalls - 9/12/16

As reported by CNNMoney, the United States is facing a one trillion dollar pension shortfall because states on average are not paying enough into their retirement plans for public employees.  According to a recent report from the Pew Charitable Trusts, only fifteen states contributed enough in twenty fourteen to pay both retiree benefits and begin to pay down their debt. 

Maryland was not one of those states.  During that year, state run retirement systems collectively had a nine hundred and thirty four billion dollar gap between promised benefits and how much has been saved to fund those payments. Preliminary data indicate that the funding gap increased in twenty fifteen, likely topping the one trillion mark.  Weaker financial returns last year contributed to funding gap increases. 

The states with the worst shortfalls in pension funding are Illinois and Kentucky.  Those two states have only funded forty one percent of the state pension obligations.  At forty two percent, New Jersey is only slightly better off.  South Dakota is associated with the best funded pension plan. 

Their plan is funded at one hundred and seven percent.   Other states that rank high along this dimension are Oregon, Wisconsin, North Carolina, Tennessee and New York.  

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.