Thursday, January 27, 2011

Moody’s to Factor Pension Gaps in States’ Ratings

   Let's be honest, finally, the pensions and medical insurance policies contracted years ago are unable to be paid.   Does anyone know, other than the politicians how much money in the budget goes to pensions given years ago?  Most of us, who even still have a job, have had to take a cut in pay at the least.  Let's put the pension reform as the next step after Obamacare is overturned. 

Moody’s new approach may now turn the tide in favor of more disclosure. The ratings agency said that in the future, it will add states’ unfunded pension obligations together with the value of their bonds, and consider the totals when rating their credit. The new approach will be more comparable to how the agency rates corporate debt and sovereign debt. Moody’s did not indicate whether states’ credit ratings may rise or fall.
Under its new method, Moody’s found that the states with the biggest total indebtedness included Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey and Rhode Island. Puerto Rico also ranked high on the scale because its pension fund for public workers is so depleted that it has virtually become a pay-as-you-go plan, meaning each year’s payments to retirees are essentially coming out of the budget each year.

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