With all the distractions from the real issues that genuinely impact citizens in North America and other developed nations, it is way past time to examine how we will respond to a real problem - unfunded pension and health liabilities. Talk about a need for simple living! It is not a warm fuzzy and we do need to make plans.
Taxpayers are in this together. How are you going to fund your future with a reduced pension and higher taxes? I have included Canadian info on these international issues but also sharing the US at this time.
Pension Liabilities
Check out http://pensiontsunami.com for updated info.
From John Mauldin http://www.mauldineconomics.com/fron...-storm-warning - "this issue is going to set neighbor against neighbor and retirees against taxpayers."
"The graph we showed earlier stated that unfunded pension liabilities for state and local governments was $2 trillion. But that assumes an average 7% compound return. What if we assume 4% compound returns? Now the admitted unfunded pension liability is $4 trillion. But what if we have a recession and the stock market goes down by the past average of more than 40%? Now you have an unfunded liability in the range of $7–8 trillion."
From the Canadian Federation of Independent Business:
CD Howe Institute’s yardstick https://www.cfib-fcei.ca/cfib-documents/rr3262.pdf on modifying assumed rates of return, it is not unreasonable to suggest that combined federal and provincial net unfunded liabilities in Canada nears the $300 billion mark. If one attempts to include the broader public sector plans, we may be dealing with true unfunded liabilities well above that. The amounts are not trivial—a $300 billion unfunded liability scenario is equivalent to about $9,000 per capita or $100,000 per government employee plan member.
Healthcare Liabilities
In the US alone (Source Patrick Watson of Mauldin Economics) - Starting in 2018, the Governmental Accounting Standards Board—the source of generally accepted accounting principles (GAAP) for state and local governments—will force officials to record healthcare liabilities on their balance sheets. Pew Charitable Trusts estimates the national shortfall will add up to $645 billion...
Fraser Institute - " [In Canadian provinces,] health care spending is expected to consume a slightly larger portion of total program spending—growing from 40.1 percent in 2016 to 42.6 percent in 2031. The range of results for specific provinces is a low of 34.2 percent in Quebec to a high of 47.2 percent in British Columbia in 2031. As well, health spending in total is expected to grow from 7.3 percent of the economy in 2016 to 9.3 percent in 2031. Health care spending in four provinces (British Columbia, Prince Edward Island, Ontario and Nova Scotia) is projected to consume over 45 percent of total program spending—suggesting increases in spending along these lines may be unsustainable and carry some risk of crowding out other programs or requiring fiscal adjustments."
Opioid drug abuse
A recent Reuters investigation found costs soaring for everything from ambulances to autopsies. Cities and counties are racking up huge bills for courts, prosecutors and public defenders, jails, and treatment programs.
The small towns and counties dealing with this opioid plague are often the same ones whose pension plans and healthcare expenses are already underfunded.
That’s bad news for current retirees, workers who hope to retire, and taxpayers who will ultimately foot the bill. In a word, everyone.