Retirement Costs And The Impacts On Cities And States

October 17, 2016

As MarketWatch reports, the Center for Retirement Research released a brief about the state and local government liabilities for pensions and other post-employment benefits (OPEB), and their financial impacts on cities, counties, and states.

In 2014, Illinois and four other states faced payments in excess of 25 percent of revenue. Pension payments are particularly high in Chicago, San Jose, and Detroit.

The good news from this analysis is that the total costs for long-term commitments – pensions, OPEBs, and debt service – appear to be under control in many jurisdictions. However, a handful of states and cities face extraordinarily high costs. Given that these entities would need investment returns consistently in the 10-15 percent range for the next 30 years to solve their problems, they face only brutal options.

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