If you don’t know what the public pension funds are, then you may not be aware of the possible crisis situation that states could be in during the next years. Any program that is built to provide retirement income for employees are called public pension funds. They are important to the public to secure their future financial well being. We may be in trouble as we grow older, if some things do not change in our economy today. Experts say that in 2008, the worldwide public pension funds were just over $20 trillion, which is the largest of the investor categories, but slowing in a decline.
Some of the states and the public pension funds are doing better than some others. Hawaii, Kansas and Louisiana are among the lowest rankings, whereas Florida, North Carolina and Alaska are earning the top positions and best marks for their public pension funds. As it looks like we are in a crisis level at this point, some important measures need to be taken in order to possibly reverse the standing trend. There will need to be a particularly bold economic recovery or else the local governments could run into some serious issues. Bankruptcies could be necessary for counties and cities around the world without a very widespread reform enacted.
Individual states are evaluated for the rankings among the best public pension funds and six variables were used for the basis of the report. They include the amount of employee contribution to their own funds or pensions and the choice of plan utilized for retirement. Also, taxable benefits, vesting time and fund solvency were weighed to come to the results. Not all of the variables were evenly weighed. The greatest weight was given to the contribution size and the plan’s overall funding. As stated earlier, Alaska, North Carolina and Florida showed exemplary public pension funds, though Florida showed a recent drop.
The public pension funds crisis can be turned around if a few changes are made. Each of the states will need to start reserving a defined amount of benefit pensions for the workers who work for their government. Employees should also pay their own fair share and the benefits will need to be taxed as other income. When these things are put into action for the states public pension funds the situation can be overturned. The financial health has been a reason for concern in recent years for the states and the public pension funds, but with a few aspects controlled and procedures put into action, the states can recover.