In order to protect their retirement savings, today’s workers will have to stay longer in the workforce, save more and expect less in pension benefits, according to Olivia S. Mitchell, Wharton professor of business economics and public policy.
Over the years, the government has tried to keep the PBGC afloat by raising premiums, but other circumstances came into play. “The financial crisis didn’t help at all. There were caps on contributions that employers were allowed to put in, and many employers have pulled out,” she said. Some, like the Teamsters Central States Pension Fund, is about $17 billion underfunded, she noted. “The problem is that any employers that can remain in business will want to try to withdraw; no new firm would try to enter that problematic pension fund because of the unfunded liabilities.”
It doesn't stop there. California:
The state controller’s office says California is now on the hook for more than $70 billion in health care costs for retired state workers. That’s a 10 percent increase from last year. Gov. Jerry Brown plans to take the issue on in his new budget proposal next month.
The sharp increase in retiree health care costs comes mostly because we’re all living longer. Controller John Chiang says the state must start pre-funding its retiree health care benefits – just as it does with pensions. He compares it to making credit card payments:
“We know that the debt service increases over a period of time – and that you ought to fully pay each bill monthly with your credit card,” Chiang says.
The "mere" $18 trillion Federal debt is but the tip of the iceberg. This isn't tinfoil. Thi is about charting a path out of the forest. Some of California's $70 billion is 30 plus years in the future and would be imprudent to pre-fund at this time. Yes, I am saying -outright- the best course for some of this obligation is to kick the can. So sue me. Sustainable polices are never clean and well defined. Especially when you are trying to clean up past excesses.