Reuters reports the new pension law will raise the retirement age for some state workers, increase worker contributions to the plan and lower monthly pensions and benefits for some public workers. It will also reduce state workers’ Christmas bonuses and eliminate summer bonus payments.
According to Reuters, officials said the overhaul, opposed by labor unions, was a crucial step to avoid a potentially devastating credit downgrade that would drive up borrowing costs and further weaken public finances.The government’s main retirement fund faces an unfunded liability of more than $37 billion. The fund, which serves more than 200,000 current and retired government workers, is only about 7% funded and officials have warned it could run out of money by 2018.
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