03/29/2024

The Pension Storm Cometh

Last April, we highlighted research from Joshua Rauh, a professor at Stanford’s Graduate School of Business, placing America’s state and local pension shortfall at an eye-popping $3.4 trillion. This year, Rauh has crunched the numbers again—and, despite a growing stock market, the situation has not improved. The Financial Times reports:

US cities and states face a “looming crisis” after the collective funding hole in the public pension system jumped by $434bn in just one year, raising fears of further Detroit-style bankruptcies.

According to academic research shared exclusively with FTfm, US public pension funds lack $3.85tn that they need to pay the retirement benefits of current and retired workers. […]

Big pension deficits have already contributed to the bankruptcy of several US cities, including Detroit. Puerto Rico, the US territory, this month declared a form of bankruptcy after amassing debt and pension obligations of $123bn.

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