Graphic: Another benefit problem
Public other post-employment benefits, or OPEB, are retirement benefits other than pension payments, mostly medical coverage. These liabilities are much smaller relative to general pension costs, but are growing. Due to relatively small balances, many states and municipalities use a pay-as-you-go policy and don't maintain ongoing trusts to cover future liabilities.
Rising costs: Inflation as well as price increases in food and fuel have been dwarfed by increases in costs associated with medical care. Pressure on OPEB plans will increase as more retirees need care.
Kicking the can: The practice of pay-as-you-go is the norm with many sponsors, but will it be sustainable?
Bigger problems: Forty-eight states maintain OPEB plans. Only two made their full actuarial contribution in their most recent period. This can be distorted by the pay-as-you-go sponsors that will only pay what is required.
Sources: Bloomberg LP; Merritt Research Services; National Association of State Retirement Administrators; Standard & Poor's; U.S. Census Bureau
Compiled and designed by Charles McGrath and Gregg A. Runburg
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