Contributions reduce aggregate demand:

US faces ‘disastrous’ $3.4tn pension funding hole

(FT) — The US public pension system has developed a $3.4tn funding hole. The collective funding shortfall of US public pension funds is three times larger than official figures showed. Joshua Rauh, a senior fellow at the Hoover Institution, who carried out the study, said: “The pension problems are threatening to consume state and local budgets in the absence of some major changes. Currently, states and local governments contribute 7.3 per cent of revenues to public pension plans, but this would need to increase to an average of 17.5 per cent of revenues to stop any further rises in the funding gap, the research said.

No growth in credit expansion here: