The Treasury Department announced the opening today of a new office, and chief among its responsibilities will be examining state and local pensions. Though the specific mandates of the office are unclear, the State and Local Finance Office will examine the problems facing state and local pension systems and serve as a “resource for retirement planning”, according to its Director.
State and Local Finance Office Director Kent Hiteshew told a meeting of the Council of State Governments that he had appointed the chief investment officer of Maryland’s pension fund as a special adviser who “will substantially strengthen our office’s understanding of the critical challenges facing a system upon which approximately 23 million Americans depend … for their retirement security.”
Saying that state and local pensions now have enough money to cover only 72 percent of their costs, in comparison to nearly 100 percent in 2000, Hiteshew added that very few pensions are well-funded.
“While the current underfunding started prior to the Great Recession, this was exacerbated by both market forces and trying fiscal times during the last few years,” he added.
Hiteshew’s office will study the state of public pensions and help retirement systems evaluate their financial conditions, and it will look into the growing costs of retiree healthcare.
Public pension systems in the US are, on average, 72 percent funded. In 2000, nearly all systems were 100 percent funded, according to Hiteshew.