Fear! State Pension Funds Reported $1.4 Trillion Deficit In 2016 (State Plans Disclosed Assets Of Just $2.6 Trillion To Cover Total Pension Liabilities of $4 Trillion)

It should be pretty simple. The state withholds funds from your paycheck and invests for your retirement. But do you really trust government to do this properly?

So not only do they underwithhold, they have to borrow funds to cover the shortfall.

According to the Pew Charitable Trusts, only 4 states had funding levels of 90%. South Dakota, Tennessee, Wisconsin and New York. The worst funded states? Illinois and Kentucky for starters.

Figure1_v3.png

In terms of operating cash flow rations, New Jersey and Kentucky are the worst. And Kansas is the only one in positive territory!

Figure8_v3

What is really surprising is that The Fed has kept rates so low for so long resulting in an asset bubble. So even with this massive aid of The Fed, state funds are STILL underwater.

spx10

So, we will all be called on to bail out state pension funds at some point in the future.

mosefear2

One thought on “Fear! State Pension Funds Reported $1.4 Trillion Deficit In 2016 (State Plans Disclosed Assets Of Just $2.6 Trillion To Cover Total Pension Liabilities of $4 Trillion)

  1. We are all Puerto Ricans now….but this will be the financial bomb that goes off during the next tightening cycle, not this one, which is probably effectively almost over (at the long end). According to the Kashkari Dot, it is over! Rising rates are also killing the US government with higher interest payments now so you can bet that another lower rate regime is coming soon. Munis and state pension funds will be saved for another cycle by the discovery that the bull market in bonds is not over, yet. In the end though, someone will have to pay the piper. Boomers cunning plan is to “age in place”, continue to consume wastefully in new and creative ways, then as shamelessly as ever, “die young and leave a good-looking corpse” and have the rest of us clean up their mess.

    Fans of market historical analogs will be watching the clock now on the 1962 analog, which is due to deliver a dump. Here some of us remain obsessed with the ever-flatter US yield curve and the dynamics of the Fed balance sheet, does the Fed have a little catching up to do in terms of unloading on its proposed schedule?

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s