Unfunded Liabilities Worse Than Forecast
HARTFORD – A new report released today by the Yankee Institute warns that Connecticut’s true unfunded liability for pension and other retirement benefits is much bigger than widely assumed.
Connecticut’s pension system serving 175,000 active and retired state employees, teachers, and those in the judicial system reports an unfunded liability approaching $16 billion – an amount nearly equal to the state’s entire annual budget. Yankee’s analysis concludes the real unfunded liability is between $51 billion and $81 billion – or at least three times as much. Yankee believes the state has counted on unrealistic assumptions about discount rates and rates of return in underestimating the real magnitude of the problem. Yankee concludes that Connecticut should move swiftly from a defined benefit to a defined contribution pension plan for government workers as part of getting retiree liabilities under control, or else the state will face yet more pressure for yet higher taxes.
“Benefit reform and modernization needs to be a topic of discussion for state level candidates of all parties in this year’s elections,” said Fergus Cullen, Executive Director of the Yankee Institute, the free-market think tank that published the study. “We hope our report will serve as a primer for that discussion,” Cullen said.
The full report, “Ignoring It Won’t Make it Go Away: Connecticut’s $51 Billion Unfunded Retiree Liability” is posted at yankeeinstitute.org