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Worried about pensions?
Are you losing sleep over your pension fund?
Public and private pension funds are under a lot of stress due to the Great Recession. The Washington Post's Peter Whoriskey recently reported state and local pensions may be underfunded by $1.5 trillion more than previously thought. NPR has reported the states are facing a $3 trillion pension shortfall.
But financial commentator Greg Heberlein tells KPLU's Dave Meyer the situation may not be as bad as it looks.Greg says there's cause for concern, but he's optimistic.
- In the case of public employees, on average each state has 17 years of money in the kitty. The funds may be down, but they haven't disappeared completely.
- In the case of private pensions, the Pension Benefit Guarantee Corp. is obligated to cover almost all private pensions. Corporations pay fees, and the federal government stands behind the agency should the money evaporate.
- Each time the economy tanks, the issue of bankrupt pensions arises. Each time the economy recovers, pension funds – stoked by accelerating values in stocks and bonds – recover.
Greg is confident that as the economy improves, so will the pension picture.