Mary Williams Walsh has a disturbing front page story in the New York Times Friday, “Pension crisis in Puerto Rico fleeces young” . The article focuses particular on the teachers’ fund.
Teachers were excused from Social Security FICA contributions and the “cash value” (so to speak) of their contributions did not begin to accumulate until late in their careers.
The article describes it as a legal Ponzi scheme.
Puerto Rico has had a minor effect on the portfolios of retirees who have moved into bonds for more stability. But it certainly sets a bad example. The story is also cautionary to public employees who may have outdated arrangements that seem to end-around social security taxes.
The conservative National Review, in a stinging article by Ike Brannon and Logan Albright, writes, “Puerto Rico is using a phony pension crisis to sabotage reform”.
Wikipedia attribution link for p.d. map of the territory. I have never visited it, but it was a popular “gay” destination from NYC in the 1970s.