There’s been a ton of talk lately about demographics and the coming pension crisis in the US.Getting buzz today is this report from the Milken Institute and authors Perry Wong and I-Ling Shen.
The basic gist: California’s demographics are rapidly worsening, and will put serious strain on the state’s pension benefits system.
Here are some key points:
- By around 2012 or 2013, the three major state pensions’ obligations will be more than five times as large as total state tax revenue.
- Not only will California’s growing senior population depend on Medi-Cal and other state services, but public school enrollment is likely to rise in the coming years. The state can ill afford to fund pensions by cutting back on these services.
- In 2009, the pension liability came out to $3,000 per working-age adult in the state. By 2014, it will triple to over $10,000 per working-age Californian.
- Raising employee contributions alone will be less effective over time as the ratio of actively contributing members to benefit recipients continues to decrease.