The World Economic Forum said in a study that the pension deficit is growing by $28 billion every 24 hours – and if nothing is done to slow the growth rate, the deficit will reach $400 trillion by 2050, or about five times the size of the global economy today.
The big offenders in the pension boogie are 1) the United States and 2) China.
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So what is the boogie? The boogie is that governments continue to promise exorbitant pension payouts while collecting a fraction of the money from contributors.
The State of California is an example of the pension boogie. California’s public employee pension systems have immense gaps – called “unfunded liabilities” – between what they have in assets and what they will need to meet their obligations to retirees.
A half-dozen Los Angeles police and firefighters received pension payouts of $1 million or more in 2016 — two reaching $1.4 million, according to Transparent California, a watchdog database listing individual state and local government employee salaries and pensions.
Well, SOMEONE has to pay those ludicrous pension payouts. Including communities that are now required to contribute MORE to pensions.
So while political pundits point the finger about Trump’s trillion dollar Federal deficits (conveniently forgetting about Obama’s 4 years of trillion dollar deficits), most ignore the larger bomb on the horizon: public pensions.
At least Social Security caps their payout to recipients.