State pension funds face massive shortfalls

(This item is cross-posted from Public Pension News)

Many state employee public pension funds are struggling under enormous UALs.

"UAL" stands for Unfunded Accrued Liability. The UAL is the difference between what a public pension fund (or any such entity) owes in benefits to current and future retirees, and the money available to pay those benefits.

The Financial Times reports that many U.S. state pension funds are facing massive UALs.

State pension funds are facing a shortfall of several hundred billion dollars, and are in much worse shape than their corporate equivalents, the head of one of the biggest state pension funds in the US revealed.

Orin Kramer, chairman of the $70bn New Jersey pension fund, has warned that deficits in the state funds, which provide pensions for teachers, fire and police officers and other public employees, would grow if no action was taken, jeopardising the entire pension system. He estimated the shortfall for the New Jersey fund alone was more than $30bn.

This is the third, wobbly leg of financial security for retirees in the United States. Along with GOP efforts to dismantle Social Security and the disastrous state of private Defined Benefit pension plans, the environment for retirees is growing hostile.