Research by IMF economists indicates that government employee pension fund assets are significantly smaller than their rapidly growing liabilities.
In the IMF working paper, Public Wealth in the United States, economists Fabien Gonguet and Klaus-Peter Hellwig analyse the evolution of the US public sector balance sheet between 1945 and 2016. They conclude that the country faces “large fiscal adjustment needs” that will require policy changes in the long-term either to raise public revenues in order to keep social promises – or to cut in other areas.
Federal pension benefit liabilities “far exceed” the value of assets held by the federal pension funds, and guarantees provided to the federal government pension funds have been shrinking since the early 1980s. “In most cases, the funding status has deteriorated considerably since 2007, driven by large negative returns during the global financial crisis,” say the authors.
This article quotes selections from “Report highlights US pension shortfall” by Gavin O’Toole, in Public Finance International, July 4, 2019.