A grim milestone for the Garden State: according to Bloomberg, New Jersey is now home to the worst funded pension program in the country. Details:
The Garden State had $135.7 billion less than it needs to cover all the benefits that have been promised, a $22.6 billion increase over the prior year, according to data compiled by Bloomberg. Illinois’s unfunded pension liabilities rose to $119.1 billion from $111.5 billion.The two were among states whose retirement systems slipped further behind as rock-bottom bond yields and lackluster stock-market gains caused investment returns to fall short of targets. The median state pension had 74.5 percent of assets needed to meet promised benefits, down from 75.6 percent the prior year. The decline followed two years of gains. The shortfall for states overall was $1.1 trillion in 2015.“It’s a long-lived problem and a long-lived solution,” said Natalie Cohen, managing director for municipal-securities research with Wells Fargo Securities LLC in New York. “Unfortunately, the solution is ugly, long, hard and requires everybody to sit down at the table together.”
New Jersey’s pensions crisis is following the same trajectory as in other struggling states: Poor investment returns and inadequate contributions have led to shortfalls that have left the state struggling to pay for its generous benefit packages, even as a flood of new retirees has begun to cash out. And as we’ve seen in states like Illinois, the money needed to cover the shortfall will inevitably lead to cuts in other government services.The clock is ticking. These problems are clearly not working themselves out.