Pension Crisis

Right on the heels of the NY Pension Crisis Post a couple of minutes ago:

Gingrich seeks bill allowing state bankruptcy to avert bailouts (Source: http://bit.ly/ifidEa)
Move afoot to help states escape benefit obligations
By Doug Halonen January 10, 2011, 12:01 AM ET

Former House Speaker and possible GOP presidential contender Newt Gingrich is pushing for federal legislation giving financially strapped states the right to file for bankruptcy and renege on pension and other benefit promises made to state employees.

Source: New York’s pension time bomb http://bit.ly/fhYo8U

New York State employees (civil servants, local government workers, elected officials, teachers, police officers, firemen, etc.) are entitled to pensions based on their final average salaries and number of years of service, often retiring with 50 percent or more of their income. The average annual pension for state and local government retirees in 2009 was $27,601. The median retirement age for teachers in New York in 2009-10 was 59 and the median annual pension benefit is $47,000. (It is estimated that a private-sector employee would need to save $860,000 to purchase a guaranteed lifetime annuity to equal the same income stream.) In 2010, New York paid out over $24 billion in pension benefits.

These figures come from a report titled “New York’s Exploding Pension Costs,” prepared by the Empire Center for New York State Policy.

This is an example of how the pension crisis will continue to be a drain on the economic recovery. There are serious implications for taxpayers and for retirees.
Jim Lindell - 2011