US - New Jersey Governor Chris Christie said he doesn't mind breaking promises to pensioners to close a $10.5bn budget deficit - even if they sue.
"I have bigger issues than who sues me," said Christie, 48, a Republican and former federal prosecutor who wants to end cost-of-living increases for retirees. "Get in line."
Public workers in Colorado, South Dakota and Minnesota are already suing their states, which are among 18 that want to pare pension costs by increasing employee contributions, raising the retirement age or curbing cost-of-living increases.
"We believe it's unconstitutional," said Gary Justus, 63, a retired mathematics teacher in the Denver public schools who's a plaintiff in the Colorado suit. "These are contracts that I and 100,000 other retirees worked for."
US cities, counties and states face a $3.6trn gap between their pension assets and what they've promised retirees, according to a study by Robert Novy-Marx of the University of Rochester and Joshua Rauh at Northwestern University. States must also contend with $140bn of budget deficits next fiscal year, according to the Centre on Budget and Policy Priorities, a Washington research group.
Pressured to cut spending and not raise taxes, public officials are focusing on pensions, said Ron Snell, senior fellow at the National Conference of State Legislatures. State plans cover 24 million active and retired workers, according to the Denver-based organization, about 8% of the US population of 309 million in 2010.
Christie, saying New Jersey's retirement benefits are "wildly out of proportion with the private sector," proposed eliminating automatic cost-of-living increases last year. The state has also stopped paying into its pensions.
Illinois lawmakers lowered retirement benefits for new workers last year. The state will borrow $3.7bn this month for its fiscal 2011 contribution, the second consecutive year it sold bonds to make payments.
States have exhausted "more palatable" actions such as cutting staff and expenses, Fitch Ratings said January 25 in a report giving a negative outlook to the state-debt sector. They face the "most difficult" fiscal year since the U.S. recession began in December 2007, Fitch said, as federal stimulus payments end.
The strain of funding pensions intensified as securities markets fell during the 18-month economic contraction, the longest since the 43-month slump of the Great Depression, according to the National Bureau of Economic Research. Asset values fell to about 76% of obligations in 2009 from about 82% in fiscal 2008, according to data compiled by Bloomberg.
Illinois has the least-sound system, with a funded ratio of about 51%, followed by Oklahoma and Kentucky, according to the Bloomberg data. Missouri, Oregon and Arkansas are in the middle with about 80%, a ratio considered adequate by actuaries.
The "rapid" growth of unfunded obligations prompted Moody's Investors Service to issue a combined measurement of states' debt and pension liabilities for the first time on January 27 so investors can compare them with companies. Pressure to fund retirements will continue to have a "negative impact" on state credit ratings, Moody's said.
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.