I recall back during Rhode Island’s pension reform debate, some people cited the federal pension plan as a relatively well-run example. Well… not so much, as Mark Tapscott puts it:
The 1984 law required federal agencies to fully fund their employees’ pensions, just like the private sector has been required to do for decades. But, as the Daily Caller News Foundation Investigative Group’s Katie Watson reports today, agencies have ignored the law with the tacit consent of the U.S. Office of Personnel Management, which oversees both CSRS and FERS.
“For years, the Office of Personnel Management (OPM) has been taking tax dollars from the U.S. Treasury to fund a growing gap in retirement payments … The OPM funded $23 billion, or 28 percent of all payments in fiscal year 2015, in that manner,” according to Watson. The federal pension system, by the way, is the fourth largest such benefit program in the entire world!
This is from the Daily Caller article:
Promised benefits from the Civil Service Retirement and Disability Fund, which has 2.6 million retirees and 2.7 million current federal employees, are only 48 percent funded. If it was a private sector system, retirement leaders would be legally required to have a rehabilitation strategy when it dropped below “critical” funding levels of 65 percent, McKinney said. But in an illustration of bureaucratic “hypocrisy,” no such requirement is applied to the federal government, he said.
The process of the public-sector pension scheme at the federal, state, and local level is to pretend that the benefits are funded while the employee is still working, but the illusion requires unrealistic investment returns and other accounting tricks. Then the government does various amortization maneuvers to give the impression of getting the system back toward solvency. Ultimately, they’ll have to come up with ways to gradually shift the burden onto taxpayers, years after the benefits were promised.
Here’s a question people should start asking: Have we reached the point that government’s killing the United States of America is a when rather than an if?