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Thursday, October 14, 2010

Maryland & States Grapple With Unfunded Pension Funds

States are facing an unfunded pension fund crisis.  Maryland is a case study that reflects a major crisis facing America. Having shortchanged its contributions to the pension plan that covers more than 100,000 former employees, the state faces unfunded pension liabilities of more than $18 billion and unfunded health-care obligations projected at $15 billion. That's $33 billion in bills coming due, a sum equal to an entire year of state spending. No one knows where the money will come from.

As stocks plummeted two years ago, so did the pension fund's balance sheet. With liabilities exceeding $50 billion, the fund now has little more than $31 billion in assets. Against the $15 billion owed for health care and other benefits, the state has less than 1 percent on hand.

Maryland is one of 19 states facing serious long-term problems. The state's pension fund was fully funded in 2002; now assets are just 65 percent of liabilities. It is one of just eight that has made no real progress in restoring the health of its retiree benefit plan

A state commission has started looking into the problem and is set to make recommendations this year. Some painful choices are going to have to be made.  (Wash Post, 10/13/2010)

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