Tuesday, September 06, 2011

Rhode Island may cut pension amounts for existing retirees

Michael Fletcher has a front page story in the Washington Post about pensions in Rhode Island, where problems are in the whole state and not just Central Falls (July 20). The print title is “Strapped Rhode Island May Take Ax to Pensions”, link here. The story discusses the town of Cranston at length. 

State officials may actually reduce the amount of public employee pensions, as well as move some of it to 401(k)’s.

Over time, will we see more public employee pension promises broken, as our system just can’t sustain them? 

Virginia and Maryland have cut defined benefit pensions to new hires while keeping them for existing retirees. 

States have tended to depend on overstatement of investment income for pension funds, which is also unsustainable, given US and European debt. 

This is the real beginning of the "pension tsunami".

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