In Puerto Rico, pensions’ decline pits retirees against lenders
As Puerto Rico attempts to sort out its tangled financial web, retirees may face bigger cuts than those in past US municipal insolvencies, due in part to an unconventional debt structure that pits pensioners against the very lenders whose money was supposed to sustain them.
The US territory is doing all it can to present itself as a reliable place to invest, but resolving the pensions issue will require a careful balance.
Benefit structures are widely seen as unsustainable, but draconian cuts to pensioners could deepen the population’s reliance on government subsidies and compound rampant emigration.
“Many of our retirees are already under the poverty line,” Puerto Rico Governor Ricardo Rossello told Reuters in an interview this past week, saying any pension cuts would attempt to protect the poorest beneficiaries. “Impacting them would be to cast them out and challenge their livelihood.”
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