Greg Mennis, of the Pew Charitable Trusts, has issued the organization’s latest exploration of states’ government-employee pension systems. The news isn’t good:
In 2016, the state pension funds in this study cumulatively reported a $1.4 trillion deficit — representing a $295 billion jump from 2015 and the 15th annual increase in pension debt since 2000. Overall, state plans disclosed assets of just $2.6 trillion to cover total pension liabilities of $4 trillion.
Just South Dakota, Tennessee, New York, and Wisconsin “were at least 90 percent funded.” Connecticut, Illinois, New Jersey, Colorado, and Kentucky held less than half of the resources needed to cover the cost of retirement-income promises made to government employees.
New Mexico’s performance ranked in the middle — tied with Kansas and Maryland at 65 percent. (Nineteen states posted worse asset-liability ratios.) But the trend isn’t good. As the chart above shows, between the 2014 and 2016 fiscal years, the funded share dipped by a disturbing nine percentage points.
In addition, a recent analysis by the American Legislative Exchange Council — which used a far more realistic rate-of-return estimate than the one employed by most government-pension managers — found that only four states had larger per capita burdens. At $28,119 for each resident, New Mexico’s obligation was in Connecticut and Illinois territory. That’s a scary neighborhood, especially given the Land of Enchantment’s woefully underdeveloped private sector.
While New Mexico’s taxpayers are legally bound to shoulder the exorbitant retirement income long-pampered bureaucrats consider their “right,” there’s no reason why the burden can’t be lightened for new employees. There’s a very simple way to tell whether candidates running for office at the state level this year are serious about fiscal responsibility: Ask them if they support switching all newly hired staffers to a defined-contribution pension plan.
If the answer is no, ask current and wannabe pols if they’ve got an extra $13.5 billion lying around.
3 Replies to “Unmet Pension Promises: An Update”
Everyone with a triple figure IQ has known for some time that most NM defined benefit public sector pensions are woefully underfunded and over-promised.These plans are so expensive, that even Sandia Labs stopped offering them for new hires as of 2011. Logically, legislation would be passed providing that new public sector hires would be covered by defined contribution plans, as Utah did several years ago. Logically, there would be constant public discussion about how the public plans will probably not be able to deliver benefits as promised and that changes are needed today so that the plans will be here tomorrow. Instead, all one hears is the sound of crickets. It says a lot about the state that it refuses to even talk about impending financial armageddon.
All Government needs to get out of pension plans as the private companies have done. And especially do not offer retirement after only 20 years of work.
My candidacy is in favor of and will propose defined-contribution pension plans under federal purview.