Saturday, December 1, 2012

Public pensions in Puerto Rico face possible insolvency

Puerto Rico may become the 51st state--but it looks like it is in the same sad state as California and Illinois--

Public pensions in Puerto Rico face possible insolvency | Retirement Income Journal - The information forum of the decumulation industry.: "After shortchanging its public retirement funds for years, Puerto Rico now has the weakest major public pension system in America, according to a report in yesterday’s New York Times.    The main fund, which serves about 250,000 government workers, current and retired, is only 6% funded and could run out of money as early as 2014. Another fund, for about 80,000 teachers, which is 20% funded, is in almost as bad shape. Police officers and teachers in Puerto Rico rely entirely on their pensions, having opted out of Social Security. The commonwealth itself has had trouble issuing bonds at attractive rates to cover its short-term financing needs. “For now, I’m not totally shaken about the possibility of the fund going broke,” said Jorge Ramón Román, a 78-year-old retired instructor for the island’s Civil Air Patrol. “But I do fear for the future, when I’ll be an even older person, more infirm and with less of a pension.”"

Answer: abolish public pensions, allow self-funded retirement funds, and expand Social Security


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