States are seeking savings in public employee retiree benefits to close sprawling budget gaps, Bloomberg Businessweek reports. "New Jersey and 20 other states are urging early retirements, cutting benefits and demanding employees contribute more in the face of what the Pew Center on the States says is a $1 trillion gap between available assets and what’s owed workers." States had only $2.35 trillion to cover $3.35 trillion in liabilities for pensions and other retiree benefits in 2008, Pew said. In New Jersey, where the state has set aside only $89 billion for $135 billion in liabilities, Gov. Chris Christie "proposed that employees still working after Aug. 1 contribute to health care and get lower benefits," a plan that would encourage current employees to retire before then.
According to Bloomberg Businessweek, investment losses are another contributing factor: "U.S. public pension funds posted a median loss of 25 percent in 2008, according to Wilshire Associates. As the value of assets declined, benefit payments to retirees grew 8 percent, to $175 billion in 2008 from $162 billion a year earlier, according to the Census Bureau" (McNichol, 6/4).