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11 State Pension Funds that May Run Out of Money
Posted Oct 18, 2010 03:50pm EDT by Gus Lubin in Investing, Recession, Election
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Provided by The Business Insider, October, 18, 2010:
Here's a shocker: The most immediate state pension crises aren't in New York or California. They're in Middle America.
When it comes to state pensions in the most trouble, do places like New Hampshire come to mind? Probably not, unless you live there, and maybe not even then.
After all, it makes sense that the biggest, most populous members of the union, where budget follies are fairly common, would be facing the most urgently needed fixes. The truth is considerably different. The Granite State claims the No. 11 slot, and it's not the only unexpected name facing pension woes.
Hawaii, Kansas and others made their way on to the list. Now, these pension plans aren't going to be obliterated tomorrow -- New Hampshire, for instance, is estimated to see its plan run out of money in 2022, so they've got 12 years to rectify the situation.
For some other states, the matter is more pressing, and no more so than for the Land of Lincoln.
Illinois is just 8 years away from exhausting its pension fund and creating a yearly $14 billion hole, according to data from Joshua Ruah an associate professor of finance at the Kellogg School of Management at Northwestern University.
That's a projected 32 percent of the state's revenue going to fill a pension hole. Every year.
Indiana, Louisiana, Oklahoma and Colorado are among the next pension funds to fall. The rest of the union is just around the corner.
But wait. Just to make sure the list is not a complete surprise, know that the New York City suburbs of Connecticut and New Jersey made it on board. They have until 2019 to sort it out.
And Now, 11 State Pension Funds That May Run Out of Money
#1 Illinois
Year pension fund runs out: 2018
Bill in the following year: $13.6 billion
Share of state revenue: 32%
#2 Connecticut
Year pension fund runs out: 2019
Bill in the following year: $4.9 billion
Share of state revenue: 27%
#3 Indiana
Year pension fund runs out: 2019
Bill in the following year: $3.6 billion
Share of state revenue: 17%
#4 New Jersey
Year pension fund runs out: 2019
Bill in the following year: $14.4 billion
Share of state revenue: 34%
#5 Hawaii
Year pension fund runs out: 2020
Bill in the following year: $1.7 billion
Share of state revenue: 24%
#6 Louisiana
Year pension fund runs out: 2020
Bill in the following year: $4.3 billion
Share of state revenue: 27%
#7 Oklahoma
Year pension fund runs out: 2020
Bill in the following year: $3.7 billion
Share of state revenue: 30%
#8 Colorado
Year pension fund runs out: 2022
Bill in the following year: $7.8 billion
Share of state revenue: 54%
#9 Kansas
Year pension fund runs out: 2022
Bill in the following year: $2.5 billion
Share of state revenue: 23%
#10 Kentucky
Year pension fund runs out: 2022
Bill in the following year: $5.3 billion
Share of state revenue: 35%
#11 New Hampshire
Year pension fund runs out: 2022
Bill in the following year: $1.0 billion
Share of state revenue: 30%
Hmmmm......most of these state I wouldn't have though were in as rough of shape as some other, more talked about states. Well you learn something everyday.
Last edited by baystater; 10-20-2010 at 07:29 AM..
At least in Florida, there's effectively a wall between the state pension plan and general state government spending and the state can't retake money and use it elsewhere once it is placed into the pension plan. So one or two bad years of state budget don't have that much of an impact on the pension funds since they're somewhat isolated.
Hmmmm......most of these state I wouldn't have though were in as rough of shape as some other, more talked about states. Well you learn something everyday.
It's just another unfunded mandate that the tax payers will ultimately end up paying.
The S&P 500 have more than $500 Billion unfunded in their pension plans. If they go belly up, then the Pension Guaranty Corporation steps in.
The pension plans are outrageous anyway. For the majority of states, 30 years of service nets you more than 50% - 75% of your ending salary as your retirement pension, and they contribute practically nothing to their benefits.
Gosh, sure does make government jobs look very lucrative... the states mentioned above are either very liberal or very corrupt... so it doesn't surprise me at all that they are at the top of the lists...
No California has not "already run out". The shortfall is in future unfunded liabilities. California has the money to continue to pay for the next 20 years. (Note I am talking about the state of California. Various cities and counties within the state, which have their own retirement systems, could be on the brink.)
Gosh, sure does make government jobs look very lucrative... the states mentioned above are either very liberal or very corrupt... so it doesn't surprise me at all that they are at the top of the lists...
I can't speak for the others but NH is neither; they are the epitome of the conservative movement. Or generally have been until late. There is no sales or income taxes in NH and they HATE to spend $$ there, my guess is they need to raise taxes but keep voting it down.
Recent studies estimate California has $500 billion in unfunded pension liabilities, not to mention over $50 billion in unfunded retiree health care liabilities.
... the states mentioned above are either very liberal or very corrupt...
Very corrupt.
Our new Republican governor in Virginia "balanced" the current State budget by stealing 600+ million dollars from the pension fund. A few more years of that crap ought to put VA on this list. I wonder if these States' pension funds have also been looted?
Wow, California has "unfunded retiree health care liabilities"??? VA sure doesn't have that problem....when you retire you pay your ENTIRE health care premium costs. In some cases, these costs eat up the entire pension benefit. Yeah, that's lucrative!
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