US - Philadelphia faces a pensions timebomb as massively under-funded liabilities and rising costs could derail the city's financial plans, according to a report by Pew Charitable Trusts.
Total pension costs were projected to rise to $613m by 2012, up from $252m in 1998 and accounting for almost a third (28%) of the city's budget.
In Philadelphia, retired members outnumber active workers by 33,907 to 28,701, a disparity which is set to increase as members of the 'baby boomer' generation retire in coming years, the report showed.
The report's authors also cited "over optimistic investment earnings assumptions" and contribution rates as low as 1.85% among municipal employees as key causes of concern.
It called on the city and pension trustees to set and adhere to rigorous spending plans, increase employee contributions and examine the fund's investment practices to provide optimal returns.
Philadelphia has an unemployment rate of 3.9% versus a national average of 5% although this masks underlying poverty (measured at 25% in the report) and low levels of education attainment (a 40% drop-out rate in public high schools and only 20% of residents have a college level degree), which serves to exacerbate the problem of public overspending.
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Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point