The multibillion-dollar pension funds that promise to pay lifetime benefits to millions of the USA's retired teachers are more than $900 billion in the red, a new analysis shows. The shortfall could put taxpayers on the hook for nearly three times as much as the funds say they need to balance the books.
The analysis, released Tuesday from the Manhattan Institute for Policy Research and the Foundation for Educational Choice, finds that all 59 funds that cover most teachers face shortfalls.
Collectively, the researchers say, the funding gap equals more than $932.5 billion, or about $600 billion more than the funds themselves claim in financial statements. The researchers attribute only $116 billion of the discrepancy to turmoil in the stock market. Much of the difference, they say, is a result of funds lowballing the cost of paying future benefits, under the assumption that stock values will rise "much higher" by the time they have to pay out benefits.
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Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors like the Ontario Teachers' Pension Plan dominate.
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