Study: R.R.'s $5B Pension Gap is 4th Worst

PROVIDENCE Rhode Island has promised $12 billion to its public employees in pension, health and other retirement benefits but has only

allocated $6.8 billion to pay for them, according to a study released Thursday.

Rhode Island's pension plans had the 4th-largest funding gap in the nation as of June 2008, according to the Pew Charitable Trusts'

Center's report on the States. The state had allocated $6.8 billion to cover $11.2B in liabilities, or 61% of the total, down from 83% in

1999.

That was the lowest pension-funding level in New England, though it was not that far behind Connecticut (61.6%) and Massachusetts (63%).

Furthermore, Rhode Island has promised current and future retirees an additional $788.2 million in life insurance, health care and other

benefits, but no money has been allocated to cover those programs, Pew found.

The study found that nationwide, all 50 states had promised current and retired employees a total of $3.35 trillion in benefits as of June

2008, but only provided $2.35 trillion to pay the bills.

While the economic crisis and decline of the investments helped create it, the trillion-dollar gap is first the result of states'

inability to save for the future and manage the costs of their public sector retirement benefits, said Susan Urahn, managing director of

the Pew Center, in a statement.

If anything, the Washington-based nonprofit said, its numbers understate the problem because they only cover the fiscal year that ended

June 30, 2008, before the major investment losses that occurred in the 2nd half of that year.

The growing bill coming because of the states could have significant consequences for taxpayers less money for public services, higher

taxes and lower state bond ratings,� she added. “States need to start examining reforms.

According to Pew, only 4 states – Florida, New York, Washington and Wisconsin had fully funded pension systems as of June 2008.

Illinois had the largest funding gap for pensions, with the state having set aside enough funds to cover only 54% of its obligations. After

Illinois came Kansas, Oklahoma, Rhode Island and Connecticut.

VIA PBN
Keyword: Life Insurance

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