US. The Coming Pension Crisis Is So Big That It’s A Problem For Everyone
By John Mauldin (President of Mauldin Economics)
A decade ago I pointed out that public pension funds were $2 trillion underfunded and getting worse. More than one person told me that couldn’t be right.
They were correct: It was actually much worse. It has gotten to $2 trillion and much worse in just a few years.
Note that we are talking here about a specific kind of pension: defined benefit plans. They are usually sponsored by state and local governments, labor unions, and a number of private businesses.
Many sponsors haven’t set aside the assets needed to pay the benefits they’ve promised to current and future retirees. They can delay the inevitable for a long time but not forever. And “forever” is just around the corner.
The numbers are large enough to make this a problem for everyone, even those without affected pensions. The underfunded pensions could also be one of the triggers to the unprecedented credit crisis I see coming in the next five years.
The problem is “solvable”… but the solutions will be problems in themselves.
Read more @forbes
