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Troubled Public Pensions

Public pensions all over the U.S. are facing severe underfunding problems.

Public employees in the U.S. count on their pensions to provide for them in retirement. While most private companies have moved to 401Ks, public employees still have the old pension system.

Because of these pensions, they are often not eligible for Social Security.


The problem is severe and not isolated to just a few public pension programs, as the Economist reports in "American public pensions suffer from a gaping hole."

The biggest source of the problem appears to be that administrators have preferred to use projection methods that are unrealistic. More realistic projections would require governments to make greater contributions.

There are no popular options to fix this problem.

Taxpayers do not want to pay more, so governments can meet their pension obligations.

Public employees do not want to contribute more of their paychecks to the pensions.

Current and future pension beneficiaries also do not want to see their benefits cut.

Something will have to give to address the public pension problem adequately.

If employees cannot rely on their pensions, then they might not be able to retire as planned, unless the federal government intervenes and covers the pension shortfalls.

People who are no longer able to work, could find themselves forced to retire and also unable to meet their expenses.

Reference: Economist (Oct. 5, 2017) "American public pensions suffer from a gaping hole."

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