Study Finds Public Pension Promises Exceed Ability to Pay
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Graffiti in Detroit in 2013. It was actuarial numbers in Detroit that obscured the value of that city’s pension promises before the bankruptcy. CreditJoshua Lott/Reuters
When Detroit went bankrupt in 2013, investors were shocked to learn that the city had promised pensions worth billions more than anyone knew — creating a financial pileup that ultimately meant big, unexpected losses for Detroit’s bondholders.
Now, researchers at Citigroup say the groundwork has been laid for similar conflicts across the developed world: Governments have promised much more than they can most likely pay to current and future retirees, without revealing the disparity to investors who bought government bonds and whose investments could be at risk…
Study Finds Public Pension Promises Exceed Ability to Pay
