State pension funds had a $1 trillion funding gap as of 2008 (Image from Pew Center PDF.) Even with the recent rise in the stock market, things are unquestionably much worse now. For example, CalPERS, the huge California fund,reported a 25% loss in July 2009.
Pension Pulse says things are made worse with current fund managers trying “shoot the lights out” by making risky investment in attempts to catch up. This is made worse by a serious lack of governmental and regulatory oversight on such funds. But the real kicker is the growing gap between public and private pensions and that public pensions sometimes must be funded at 100%. If they don’t have the money, the funds can get it from taxpayers. Right, that’ll play well now with those who have lost homes and 401-K’s and are told they must now fund often bloated public pensions at full value.