September 28, 2023

WSJ: Wealthy Connecticut’s pension problem is a ‘ticking time bomb’

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pension savings planBy FJ McGuire From Newsmax

Connecticut has roughly half of what it needs to pay future retirement benefits for its workers, with one lawmaker calling the situation a “ticking time bomb,” The Wall Street Journal reports.

Ironically, that means the Constitution State, which is home to hedge funds and some of the country’s wealthiest towns, is battling financial distress rivaling that of Kentucky or Illinois, the Journal reported.

Some investors concerned about the size of Connecticut’s pension hole are backing away from bonds issued by the state or demanding bigger rewards to hold them.

“Connecticut’s surprising pension predicament shows how even the wealthiest parts of the U.S. are struggling to keep pace with ballooning retirement obligations that now amount to $1 trillion nationally,” the Journal reported.

“Connecticut’s unfunded pension liabilities more than doubled over the past decade to $26 billion as the state’s retirement system reeled from inadequate state contributions, a subpar investment record and longer lifespans for its retirees,” the Journal reported.

“The state, boosted by wealth concentrated in towns such as Greenwich and New Canaan, has a per capita income of $64,864, the highest in the U.S., according to a Fitch Ratings analysis of Bureau of Economic Analysis data,” the Journal reported.
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The state’s pension problems represent “a ticking time bomb,” said State Sen. L. Scott Frantz, a Republican whose district includes the wealthiest section of the state. He is worried residents will leave and Connecticut will “end up as another Detroit,” a city that filed for bankruptcy protection in 2013, absent more dramatic changes.

In Illinois, Chicago Mayor Rahm Emanuel has disclosed that his record property tax hike plan entails significant cuts for nearly 300,000 homeowners, leaving Chicago businesses predicting they will face hikes of up to 50 percent, Reuters reported.

The second-term mayor last week proposed a $544 million property tax increase, the city’s biggest ever, to help fix one of the worst-funded city pension systems in America and vowed “struggling” homeowners, whose residences are worth $250,000 or less, would not see an increase.

Combined, Chicago’s police and fire pension funds had a deficit of $12.1 billion as of December, city records show. The fire pension system is only 23 percent funded, while police pensions is 26 percent funded.

Image: WSJ: Wealthy Connecticut’s Pension Problem Is a ‘Ticking Time Bomb’ (Dollar Photo Club)

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