Trouble In Public Pension System

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The US public pension system faces a higher-than-expected shortfall of more than $2,000 billion, says Orin Kramer, chairman of New Jersey’s pension fund, a senior partner at the hedge fund Boston Provident, and a democratic power broker.
This shortfall will increase pressure on many states’ already strained finances and crimp economic growth. “State and local governments are correctly perceived to be in serious difficulty,” Mr Kramer told the Financial Times. “If you factor in the reality of these unfunded promises, their deficits will rise exponentially.”
A shortfall of that size could force state governments to take unpalatable decisions such as pouring more public money into their funds or reducing pension benefits. State and local governments have already cut spending to close budget deficits.
Pension funds’ requirements are expected to compound the pressure on local finances. Thirty-six of the 50 US states, including California and New York, have plunged into budget deficits since fiscal year 2010 began, which for most states was July 1 2009.
To read the Financial Times article on this, CLICK HERE.

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