We pay about $450 a month. I have heard possibilities of it going up to more than $1,800 a month. But I think it will probably be raised $1,000,” said Merriman, 63.
That’s more than her monthly pension.
In California, from 2004 to 2013, prices grew 113 percent at hospitals that are part of the largest systems, according to a 2016 study coauthored by economist Glenn Melnick. By comparison, prices across all hospitals in the state grew 70 percent.
One reason this has happened over the last 10 to 15 years is that companies are not getting enough return on their investments. People expect pension funds to earn about 7-8% on average every year, but they’ve fallen short of that.
All told, the changes will pile on an additional $6.5 billion in accrued liabilities — a gap in money available to pay promised benefits. Ohio pension systems are required to be able to pay off their unfunded liabilities within a 30 year window.
But changing the assumptions used by STRS means the system’s funding period will jump from 26.6 years to 59.5 years. This will require STRS to come up with a new plan to get back within the 30-year window.
If public pension funds used the same projection method as their private counterparts, their deficit would be around $3.4 trillion—that’s a whopping 19% of U.S. GDP.
Contributions to Social Security, which are closely tied to jobs, represent over 80% of the system’s entire budget and are its main source of funding. These contributions grew 3.15% last year on the back of a better job market, yet the revenues are still falling short of the system’s pension payments, which grew at a rate of 5.87%.
Non-performing loans at the country’s lenders have doubled to 1.5 trillion yuan ($218 billion) in two years through 2016. ShoreVest estimates the country to have about $3 trillion in distressed debt including account receivables, with the volume still growing.
Consequently, total household debt climbed to $12.58 trillion at the end of 2016, reflecting a $266 billion increase from the third quarter and $466 billion compared to a year earlier. This share of indebtedness has flirted with levels not seen since the financial crisis, when total liabilities peaked at $12.68 trillion.
The state recently calculated the pension funds’ unfunded liabilities at $49.1 billion, but under a more stringent set of accounting standards accepted as the industry norm, the unfunded liabilities exceed $100 billion.
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