INSCOR, Inc.'s Tailored Plans Could Solve America's Underfunded Liabilities Problem
05 September 2013 - 10:30PM
Marketwired
Seven weeks ago today, Detroit became the largest U.S. city to file
for bankruptcy, and in the process, became the 8th city, town or
county to join the growing ranks of bankrupt government entities
since 2010. This list will likely continue to grow given the
underfunded liabilities many government entities face in their
futures. INSCOR, Inc. (PINKSHEETS: IOGA) executives knew this storm
was brewing when they specifically tailored one of the company's
insurance products to address what is now an epidemic in the U.S.
-- broken promises to employees.
Government entities hired employees years ago by winning them
over in the recruitment process with promises of employee retiree
benefits like pension plans, healthcare, dental, prescriptions,
life insurance and other post employment benefits. But, for years
they made these promises without actually putting money aside to
pay for them, and accounting rules allowed them to get away
with.
However, as cities are finding out now, they didn't really get
away with it. In addition to the obvious problems of having the
piper come-a-calling, accounting rules were changed (GASB45) by the
Governmental Accounting Standards Board, and now budgets nationwide
are bursting at the seams.
Needless to say as these entities now have to pay for and
account for these future costs, a panic has set in because up until
now these were costs that were accounted for on a pay-as-you-go
basis. That panic is justified because municipalities are
increasingly confronted with how to pay for these massive
promises.
The Pew Center for the States, in Washington, estimated states'
public pension plans across the U.S. were underfunded by a whopping
$1.4 trillion in 2010, and as one can only imagine that number is
likely very conservative today.
INSCOR designed what it calls a Financed Insurance Trust (FIT)
plan for Other Post-Employment Benefits (OPEB) -- meaning the
employee benefits covered in the plan are all those promised
benefits after retirement other than pension plans.
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