What's $300 billion between friends?
|Reuters reports that a new actuarial study by Milliman has takenanother look at the funding status of America's 100 largest publicpension plans, and earlier estimates likely understated theunfunded status by at least $300 billion.
|All totaled, Milliman suggests, the deficit is probably closerto $1.2 trillion. The earlier numbers, the firm says, were based ona median funding level of 75.1 percent; Milliman's more forensiclook at the numbers, using different standards to gauge liabilitiesand assets, puts the median funded level at 67.8 percent.
|Oddly, Milliman researcher Rebeccar Sielman, author of thereport, said that huge difference was in fact a piece of good news,as it at least demonstrates that America's major public pensionsystems are being truthful about their financial standings - bothgood and bad.
|Most of the 100 funds tracked by Milliman had set their medianrate of return on investments at 8 percent but more recent,post-meltdown years have reduced that to about 3.2 percent per yearfor the last five years.
|According to Reuters, that has fostered a climate where manypension funds are more frequently underreporting their unfundedliabilities, and political critics across the nation have suggestedthe funds drop their assumed rate of return to a more realistic 5percent - which could have drastic effects on the unfundedliabilities and the plans' ability to pay benefits in thefuture.
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