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The 2015 Pension 40: Alejandro García Padilla

No. 7 Alejandro García Padilla, Governor / Commonwealth of Puerto Rico

By Tyler Davies

December 22, 2015

< The 2015 Pension 40: The Long Climb

Alejandro García Padilla

Governor / Commonwealth of Puerto Rico

Last year: 22

When a public employee pension plan with a funding ratio under 1 percent isn’t the biggest fiscal problem your administration faces, you know you’re in trouble. That’s exactly the situation faced by Puerto Rico’s governor, Alejandro García Padilla, 44. The commonwealth’s two major pension plans, the Employees Retirement System and the Teachers Retirement System, have staggering unfunded liabilities: As much as 99.3 percent, or $30 billion, for the employees’ system; 88.5 percent, or $13.1 billion, for the teachers’. The most optimistic recent data suggests the employees’ assets will be fully depleted by 2021, when the commonwealth will have to find more than $1 billion a year to pay retirees. Yet the estimated $45 billion pension shortfall isn’t the really bad news. In 2013, before its credit rating was slashed to junk, Puerto Rico, with a population of 3.5 million, was the third-largest issuer of U.S. muni debt, behind only New York and California. In June, when Padilla announced that Puerto Rico owed more than $72 billion to creditors and couldn’t pay, the muni market sold off. With more than $1 billion in bond payments coming due between December 1 and January 1, the commonwealth and its representatives have been in intense negotiations with creditors. Meanwhile, Congress, the White House and the U.S. Treasury Department are exploring options that include letting Puerto Rico file for bankruptcy, which it’s now banned from doing. Padilla is up for reelection in 2016 and expected to face a tough fight to stay in office. If he survives the election and debt negotiations, he will still confront the enormous pension shortfall.

The 2015 Pension 40