31 states are short over 1 trillion on pensions

The upshot of a recently released study suggests that more than half of all states in America are short of funds for the retirement benefits they have promised to pensioners.

According to the Washington-based Pew Research Center, 31 states are short of USD 1.26 trillion on promises to the retirees and in just one year the funding gap has grown by 26 percent. The funding levels of ten additional states have also deteriorated, a press TV correspondent reported on Wednesday.

Pensions are deemed "underfunded" when states are unable to pay at least 80 percent of liabilities, according to results of the study by the nonprofit think tank. Such pensions affect everyone because they mean higher taxes or cuts in essential public services.

“If we promised more than what is there what do we do? Magic?” Economic analyst Rollin Amore asked.

Most states are legally bound to pay for the pensions; they may borrow from other states rather than the federal government, if they don't have the money in their treasury. Many Capitol Hill lawmakers have already backed legislations to prevent the federal government from bailing out states.

The gaps are already straining governments and stoking political fights over the workers' benefits in states such as New Jersey, Ohio and Wisconsin. More...