Pension Debt Grows by Another Billion
Last week the State Employees' Retirement System (SERS) announced its total unfunded liability increased from $18.44 billion in 2015 to $18.79 billion.
In truth, SERS' unfunded liability grew by about $1 billion this year due to artificially low employer payments. A more accurate calculation comes from the SERS actuary, The Hay Group. They estimate an unfunded liability of $19.45 billion as of December 2015.
Artificially low employer payments aren't the only reason the unfunded liability has grown. SERS assumes a 7.5 percent rate of return for investments, but the actual rate of return has been far less, only 0.4 percent in 2016.
Keep in mind that SERS liabilities represent less than half of the overall pension liability taxpayers will pay. The larger Public School Employees' Retirement System is carrying a $37 billion liability for a total of $56 billion.
Clearly, letting Act 120 work means more debt for taxpayers. Giving state workers greater control over their retirement is the only way to boost worker security and stop the flood of red ink.