Use access key #2 to skip to page content.

Public pension underfunding per person



August 08, 2010 – Comments (12)

Recently there are have been a few reference to public pensions being underfunded by $3 trillion.  Mish has a post today.

I wondered about how much it was per government worker, so I looked up and found a reference to how many workers are government workers, just under $12 million.   So, $3 trillion / 12 million = $250k per worker...

Holy s**t... 

12 Comments – Post Your Own

#1) On August 08, 2010 at 8:39 PM, dwot (29.27) wrote:

Ok, here's a part of Mish's post:

Terry Podmore: Fort Collins CO - August 6th, 2010 5:45 pm
I am a recent retiree of Colorado PERA, having served 30 years as a faculty member at Colorado State University. What the state has done is a travesty to all existing retirees, having broken the promises of retirement security. As an individual, you make the best decisions you can based on the conditions prevailing. To have these conditions changed after the fact puts all current retirees at risk at a time of life where there are few options.

Terry's attitude is typical of the attitude of those who could not or would not consider the risks of what they were doing. It is not the fault of taxpayers if the faculty at Colorado State University is not bright enough to figure out the system is unsustainable. Besides, did Terry take the job because that is what he wanted to do, or because of benefits? Either way, Terry has no complaint. In one case Terry would have done the job anyway, in another case he was not bright enough to figure out what was happening. Taxpayers have no responsibility to bail out people who cannot think.

In my early 20s, before I went to university (I didn't go until I was 23), I already had the common sense to know that pensions were not sustainable and it was around then that I wrote my first letter to government about the need to extend retirement ages.  That was and still is needed but what they did was lower the age one could start collecting Canada Pension to 60.  I get so tired of the lack of numeracy and number sense out there.  And think about it, far more who have poor math go into something like political science then those who have good math skills...

Report this comment
#2) On August 08, 2010 at 9:36 PM, alstry (< 20) wrote:

It looks like you and I are in a numbers mood tonight.....I hope it doesn't spoil the mood for the rest of the evening.

Report this comment
#3) On August 08, 2010 at 9:38 PM, tomlongrpv (62.99) wrote:

See this link on Social Security:,0,1359956.column

I know that Social Security is not the only public pension you are referring to and I am sure there are some funding problems.  But I suspect neither of us have researched it closely.  The figures you bandy about may be as accurate as the figures used for Social Security where demagogues trying to destroy the program exaggerate shortfalls by manipulating the data and ignoring income.

Report this comment
#4) On August 08, 2010 at 9:44 PM, alstry (< 20) wrote:

If government actually used GAAP accounting, the deficit would be closer to $4 trillion dollars per year instead of the current reported $1.6 trillion.

If we applied a $4 trillion dollar deficit to current pension actuarial tables, the underfunding would likely be much greater then the current high estimate of $3 trillion.....

So maybe holy sh*t could be just the beginning....if you really understand accounting.

Report this comment
#5) On August 08, 2010 at 11:40 PM, tomlongrpv (62.99) wrote:

Alstry  So where do you get your data from?  Just curious.  Sounds like more Fox News data to me.

Report this comment
#6) On August 08, 2010 at 11:51 PM, dwot (29.27) wrote:

tomlongrpv, I mix two pensions up in the post.  The US pension underfunding is for government workers, but then I also related the Canadian universal pension system, like your social security.

Now, wrt to your social security, there is no money there, just a bunch of ious. 

Since 1983, the money from all payroll taxpayers has been building up the Social Security surplus, swelling the trust fund. What's happened to the money? It's been borrowed by the federal government and spent on federal programs — housing, stimulus, war and a big income tax cut for the richest Americans, enacted under President George W. Bush in 2001.

Interesting how the author of your link says people say it is all a bunch of ious, like I did, but clearly the paragraph above shows that it isn't there.

Report this comment
#7) On August 09, 2010 at 12:04 AM, ChrisGraley (28.67) wrote:

In Ohio, a group of newspapers requested records for the 400,000 people on State pension funds and were denied because the State said they can't divulge personal information.

I'm pretty sure that they didn't want to show the extent of the fraud and double dipping involved with the system, but as long as they control the information, who can prove it? 

Report this comment
#8) On August 09, 2010 at 12:56 AM, AbstractMotion (< 20) wrote:

Just to clarify, the government has been borrowing against/IOUing the social security surplus since it existed (starting with Reagan, it wasn't simply G. W. Bush as the Latimes article implied, Clinton balanced his budget with that surplus ).  Each year when there's a surplus it's credit to the general fund the treasury puts non auctionable treasury bonds in the trust fund.  There's basically no external assets there, it's effectively the burden of the future tax payer, albeit a bit more sophisticated then an IOU, they get interest credited and so forth.  The most pressing problem is that we're a few years away from the point where a draw down of the fund will start, which will shift billions of dollars in extra costs to the general fund.  Essentially there's no assets backing the trust fund other then the government's ability to tax it's citizens.  There's no external assets backing up, the responsibility falls on either the tax payer or perhaps the federal reserve if they decide to print the difference.


Report this comment
#9) On August 09, 2010 at 9:06 AM, dwot (29.27) wrote:

So, if Clinton "balanced his budget" with funds for social security then he really had a deficit that was the amount he took from social security?

If I read what you are saying correctly, this is a huge problem, deficits are being understated by the amount of social security revenue less its expenses.

Report this comment
#10) On August 09, 2010 at 9:29 AM, AbstractMotion (< 20) wrote:

Due to government accounting social security surplus income is counted as general government revenue, and a special treasury bond is placed in the trust fund account, this has pretty much been standard practice since Reagan revamped the program in the 1980's.  Ages ago they apparently had the option of investing surplus money into private market bonds or foreign debt, but that's no longer standard practice.  


I'm not sure exactly how deficit accounting is done, but the federal debt as a whole increased during the balanced budget periods.  My understanding is that Clinton did offset some of the "mandatory" borrowing against the trust fund accounts by paying down some of the public debt, but YoY even during the "surplus" years the national debt as a whole increased.  So it was basically a big accounting trick, public debt decreased but intragovernmental debt has a bigger increase due to the way many government trust funds are structured.  Apparently it's not just social security that does this either but virtually every trust fund the government runs, including the civil service retirement fund and some veteran's programs.  The way most of these programs are put together requires some measure of deficit spending as long as surpluses exist.


Report this comment
#11) On August 09, 2010 at 1:34 PM, totallyoblivious (< 20) wrote:

Any pension's program's problem is that it assumes there will always be an equal or greater number of people paying into it than drawing from it.  It's fairly obvious to most reasonably intelligent people that any pension program is therefore destined to fail at some point in the future. 

 Social Security needs to be dissolved in a way that won't leave people who are currently dependent on it destitute, but the government also needs to send a clear message that anyone who is under 40 today shouldn't expect to ever see a dime from it.  I'd rather see it dismantled in a slow, controlled manner than have it implode on it's own, which is what it's destined to do.

Report this comment
#12) On August 09, 2010 at 4:10 PM, dwot (29.27) wrote:

Thanks Abstract.

totallyoblivious, when I looked at pension history I saw something on how there used to be a means test to collect a pension.  I am not sure if that was Canada, US or both. 

One thing for sure is that the majority of people under 40 can't afford to be required to be paying into the current system and provide for themselves.

Report this comment

Featured Broker Partners