UNDERFUNDED TEACHER PENSION PLANS: It’s Worse Than You Think
"The general picture is not a good one. According to the fifty-nine funds’ own financial statements:
Total unfunded liabilities to teachers—i.e., the gap between existing plan assets and the present value of benefits accrued by plan participants—are $332 billion.
According to our more conservative calculations:
These plans’ unfunded liabilities total about $933 billion.
In addition, we have found that:
Only $116 billion, or less than one quarter, of this $600 billion discrepancy is attributable to the stock market drop precipitated by the 2007 financial crisis.
The Dow Jones Industrial Average would have to nearly double overnight to make up for the present underfunding of these plans."
1 comment:
The higher return rates for their pension portfolios, the pension giants calculate a much smaller. Discounting liabilities at these higher rates, however, ignores the probability that actual returns will fall below expected levels and allows pension funds to paper over the magnitude of their problem.
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