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June 1, 2013

States sinking in pension plan debt: Column

Nathan Benefield:

Taxpayers nationwide are staring down a swelling tidal wave of government pension debt. Recent estimates put the combined unfunded liability of state pension systems at $2.5 trillion. Nearly every state has tried to reduce these unsustainable costs, but most reforms have proven to be baby steps or worse -- leaving future generations up to their necks in waves of debt.

One inescapable fact remains: Without meaningful reform, paying down these liabilities would cost the average American household an additional $1,385 in taxes every year for the next three decades.

Not all state reforms have merely kicked the can down the road, however. Some states have pursued -- or are pursuing -- a shift to a defined contribution plan like the 401(k), which most private companies already offer. These states are leading the way in government pension reform. By simply moving to a 401(k)-style plan, states will put themselves on surer financial footing and protect taxpayers from the political games that have created this funding crisis.

Posted by Jim Zellmer at June 1, 2013 1:18 AM
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