Born Broke: Our Pension Debt Problem
Pension and other retiree liabilities are being dramatically underestimated because the state of Connecticut’s estimates are based on unrealistic assumptions about discount rates and rates of return, and because the state does not include its retiree healthcare and other costs in its figures. The real unfunded pension liability is $76.8 billion, or 213 percent higher than current forecasts, with other retiree benefit liabilities coming in at $22.7 billion. Add the two obligations to retirees together and Connecticut’s total unfunded retiree (pension plus OPEB) liability clocks in at $100 billion. For comparison, that figure is five times the amount the state collects in revenues per year. Additionally, as of 2009, the City of Hartford has a $700 million unfunded pension liability. Connecticut’s state government administers retirement benefits for state employees, teachers, and those in the judicial system. These three groups include 174,300 working or retired people. Of those, 76,420 drew pension benefits in Fiscal Year (FY) 2012.