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Mercer Consulting reckons that governments that have not set aside money for future obligations will face liabilities 40-60 thees the current annual cost of retirees' health care.
The graphic you sent contains this statement: "In general, pension funds should hold 80 percent of the funds needed for future obligations.
They dole out cash to pay for the medical care of those who have retired, but set none aside for future obligations.
It involves the maturity of the fund and its ability to deploy capital into new opportunities (ie "dry powder" – cash reserves for future obligations).
With accrual accounting, the promises to pay future pensions would appear in the government's accounts when the promises for future obligations are made.
That figure is far higher than the $162 billion the government officially announced as last year's deficit, because the federal estimate fails to account for future obligations.
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Trump acts as if the money has been spent, but he is referring to a Brown University study that included estimates of future obligations through 2056 for veterans' care.
An example of future obligations not taken into account was no provision in the plan for further pay increases for municipal employees.
Claims reserving is obviously necessary for representing future obligations of an insurance company and selection of an accurate method is a major component of the overall claims reserving process.
Even though 49 states mandate a balanced budget, either constitutionally or statutorily, there is no uniform definition of a balanced budget, and accounting trickery has allowed states to avoid paying for their future obligations.
As a country, we are not highly indebted compared with others, even though we don't account for (or yet have a plan for dealing with) future obligations for programs like Medicare.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com