ST. LOUIS (KMOX) – Missouri’s five largest public pensions are far more underfunded than officially reported, according to a new study released Monday morning.

The study, conducted by the American Enterprise Institute’s Andrew Biggs for the Show-Me Institute, claims the real value of unfunded pension liabilities is not $11.1 billion, but nearly $54 billion.

Show-Me Institute Policy Researcher Michael Rathbone said the difference stems from Biggs’ use of a discount rate of four percent, rather than the seven-eight percent public pensions use.

“The lower the discount rate, the more money you have to put up now in order to get the numbers to add up in the end,” Rathbone explained. “So, you’re basically making sure you have more money available to your public employees by using this lower discount rate by doing it now.”

Biggs recommends the plans shift to a defined contribution structure. “What shifting to a defined contribution plan,” Rathbone said, “would do would make sure the unfunded liabilities wouldn’t grow so that new employees going on the system wouldn’t be added to the liabilities of the current system.”


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