Could NH’s $5 billion pension problem be much, much bigger?
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Andrew Biggs authors a new report for State Budget Solutions that finds that states are massively underestimating their unfunded pension liabilities at a measly $885 billion.
However, reports from academic economists and nonpartisan government agencies strongly suggest that the true state of public sector pension funding is far worse than suggested by official plan disclosures. The accounting rules followed by U.S. public sector pensions are more forgiving than those required for private sector pensions or public sector plans in other countries. So-‐called “fair market valuation” more fully reveals the value of public sector plan liabilities and shows that the average public employee pension plan in the United States is only around 41 percent funded while total unfunded liabilities as of 2011 are roughly $4.6 trillion.
The New Hampshire Retirement System estimates its unfunded pension liability at $4.2 billion, with additional obligations for medical subsidies that haven’t been paid for. Biggs’ report suggests the true costs to New Hampshire taxpayers could be up to five times that amount.