Study: States must fill $1 trillion pension gap

States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn’t taken. The Pew Center on the States released a survey last week of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states; it concluded that a decade’s worth of policy decisions are to blame for leaving many states shortchanged. The result for some states will be “high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future,” the study says. Louisiana was ranked as a state with “serious concerns” because 70% of the accrued liabilities were funded. The Louisiana State Employees Retirement System issued a statement, noting that Pew found the state was one of the 10 best for paying the actuarially required rate. The state has also taken steps to reduce the debt, such as reducing the unfunded liability by $500 million last year and raising the minimum retirement age.