There have been many reports of the perilous financial state of state and local pension funds and of Social Security. Overlooked in all the analyses is the terrible condition of the retirement system the U.S. governments offers for its own employees. The system was reformed somewhat in the 1980s to a hybrid system. Long-time employees received an annual pension that is far less generous than the predecessor system. Plus, they have a 401(k)-type option. But the federal government doesn’t require itself to prefund the retirement benefits, and it doesn’t. Here’s a review of the financial condition of the system.
The US government has nowhere near enough money to pay retirees.
According to credit rating agency Moody’s state, local, and federal governments are about $7 trillion short in funding upcoming pension payments.
“The unfunded liabilities of the various federal employee pensions systems, covering civilian and military employee benefits, amount to about $3.5 trillion, or 20% of US GDP,” said a release from Moody’s Wednesday.