Puerto Rico Economic Pulse ©

April 2013: Survival of PR’s Public Retirement System

Analysis and lessons to be learned

In 2011, the Center for Retirement Research at Boston College concluded the average baby boomer was financially unprepared for retirement and, as a result, had to plan to work longer. The 2008 financial crisis wiped out $11 trillion of US household wealth, including both real estate and financial assets. The recent stock market recovery trimmed that loss to about $8 trillion. Since 2004, PR has lost $18 billion of wealth, as measured by the PR Stock Index. People close to retirement age still have an enormous savings gap if they aim to keep their current lifestyles. Since Government accounts for 26% of total employment in PR, public retirees will represent an important share of all retirees. In FY 2011, the unfunded liability of the Public Retirement Systems, Central Government plus Teachers, amounted to $35.6 billion. How did we get there? What can we learn from other jurisdictions? Is recent Law 3 a solution? Find out in this Pulse.