Politicians love to promise generous retirement benefits to government employees (mostly in exchange for being elected). Benefits that they know cannot be fully honored in the long-run. The same applies to government debt — they keep borrowing knowing it is unsustainable (and then offer the childish explanation that “we can always print the money” to pay government obligations). The Congressional Budget Office (CBO) projects that Federal Debt Held by the Publc (as a percentage of GDP) will grow to 150% by 2047.
I can imagine that most elected officials in Congress are saying “we’ll fix the debt problem AFTER I leave Congress.”
But the Federal debt fiasco almost pales in comparison to the public pension inferno. Not to mention California’s push towards a single-payer healthcare system that would cost $400 billion … per year (BIGGER than California’s budget).
A good example of the government inferno? In California, the average Costa Mesa firefighter makes nearly $250,000 per year that includes the cost, on average, for their regular pay, overtime, “other pay,” the city’s payment to CalPERS for the city’s share, the city’s payment to CalPERS of a portion of the employee’s share, and the city’s payments for the employee’s health and dental insurance benefits. And on the retirement side, California has 25 University of California retirees receive annual pensions exceeding $300,000.
In other words, Treat Yo Self to other people’s money.
While police, firefighters and teachers perform important public tasks, their compensation and pensions must be realistic and not contribute to a fiscal catastrophy.
And then we have the story in Forbes about the largest public pension fund CalPERS paying absurbs compensation levels to “advisors.”
But expensive and exploding pensions are not limited to the USA, The World Economic Forum has issued a study entitled “We’ll Live to 100 – How Can We Afford It?” In a nutshell, we can’t afford it.
As of 2015, Unfunded government pillar 1 and public employee pension promises totaled $23.2 TRILLION. And by 2015, pension shortfalls are expected to hit $136.8 TRILLION in the USA alone. And $428 TRILLION globally. That last figure is nearly half a QUADRILLION dollars!
And the Retirement Savings Gap keeps getting worse as more and more people retire and economic growth slows down.
Of course, the major culprit in the pension inferno is …. the government!
We are already aware of the serious public pension underfunding problems in states like California and Illionis. Not to mention counties like Detroit’s Wayne County and Chicago’s Cook County (aka, “Puerto Rico on Lake Michigan”). But Federal, State and Municpal politicans are hesitant to reign in the pension insanity.
The government pension “Treat Yo Self” to other people’s money mentality!
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