Federal Retirement Plans Almost as Costly as Social Security
September 30, 2011
Retirement programs for former federal workers -- civilian and military -- are growing so fast they now face a multitrillion-dollar shortfall nearly as big as Social Security's, a USA Today analysis shows.
The federal government hasn't set aside money or created a revenue source similar to Social Security's payroll tax to help pay for the benefits, so the retirement costs must be paid every year through taxes and borrowing.
- The government paid a record $268 billion in pension and health benefits last year to 10 million former civil servants, military personnel and their dependents, about $100 billion more than was paid a decade earlier after adjusting for inflation.
- And $7 billion more was deposited into tax-deferred accounts of current workers.
In addition, the federal government last year made more than a half-trillion dollars in future commitments, valued in 2010 dollars that will cost far more to pay in coming decades. Added last year:
- $107 billion in retirement benefits accumulated by current workers.
- $106 billion in new benefits granted to veterans.
- More than $300 billion in the snowballing expense of previous retirement promises that have no source of funding.
In all, the government committed more money to the 10 million former public servants last year than the $690 billion it paid to 54 million Social Security beneficiaries.
The retirement programs now have a $5.7 trillion unfunded liability, compared with a $6.5 trillion shortfall for Social Security.
Source: "Federal Retirement Plans Almost as Costly as Social Security," USA Today, September 29, 2011.
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