Public sector workers in the US must be seriously concerned that their pensions will not be funded when the time comes to retire. A new report shows over $2 trillion in unfunded liabilities and according to Moodys, its common knowledge that authorities lie about it.
(Reuters) – U.S. states and localities have run up more than $2 trillion of unfunded pension liabilities, Moody’s Investors Service said on Monday, citing data on plans offered by 8,500 local governments and over 14,000 individual entities.
The Wall Street credit agency said that according to its estimate, the total liabilities for fiscal 2010 were more than three times the amount reported by local governments.
Pension liabilities are widely acknowledged to be understated,” Moody’s Managing Director Timothy Blake said in a statement. Most states end their fiscal years on June 30.
Investors in the $3.7 trillion municipal bond market are focused on whether states, counties, cities and towns can afford the pension benefits granted public workers.
The rising cost of public pensions has strained finances for cities around the country. Stockton, California, which last week became the biggest U.S. city to file for Chapter 9 protection, plans to cut employee compensation and retiree benefits by $11.2 million to help close its deficit.
Public pension benefits have become a flashpoint in elections around the country.
Since 2009, at least 43 states have tried to rein in costs. But many states spread the savings out over long periods.
Moody’s is seeking public comment through the end of August on four major changes it plans to make in how it treats pension liabilities. The negative impact of the modifications – which will start taking effect in the fall – will hit local governments such as counties, cities and towns, as well as school districts, most heavily – unless Moody’s significantly alters them after reviewing the public comments.