Pension promises broken
By Gina Jordan
Tallahassee, FL – New research shows that many local governments are promising more in retirement benefits to their employees than they may be able to deliver. Gina Jordan tells us the report, titled "Trouble Ahead," says Florida's municipalities are facing tough choices.
The research finds that county governments on average spend 8.1-percent of their budgets on pensions and health insurance for retirees. Dr. David Matkin wrote the report for the LeRoy Collins Institute, a nonprofit think tank in Tallahassee. He says as incentive packages become more generous and more employees are hired, the unfunded portion of a local government pension account grows.
"Many of them are underfunded, 80-percent, 60-percent funded. So when you have that backlog of not having fully funded your obligation, you have to increase how much you have to pay each year to try and catch up."
Matkin says counties are only investing about 40 percent of what they need to in order to fund benefits for retiring employees. The report offers recommendations, like increasing the qualifying age for benefits, and making sure municipalities set a minimum contribution rate for funding their obligations.