Very interesting article from USAToday.com: “Huge bill for public retirees hits soon.” Excerpt:
Retiree medical costs are the biggest long-term challenge that state and local governments face. By comparison, state and local pensions have an unfunded liability of about $500 billion.State and local governments have set aside $2.5 trillion to help pay pension benefits for 19 million civil servants and 7 million retirees. But they have set aside almost nothing to pay for retiree medical benefits. . .
New accounting rules require that governments, starting next year, put a price tag on the value of medical benefits promised to civil servants when they retire. New York City’s liability, for example, approaches $50 billion. The city’s total budget last year was $53 billion.
“It’s no exaggeration to say that elected officials are shocked, absolutely shocked, by the size of these liabilities,” says Donald Rueckert Jr., senior vice president and actuary at Aon Consulting, an insurance broker.