Today, unfunded pension liabilities are on track to bankrupt major cities and lead to big benefit cuts for retirees. Some experts believe America’s pension problem will trigger the next economic recession.
The Challenges of Public Pensions
Public Pensions are retirement plans for employees of federal, state, and local governments. These workers include teachers, firefighters, police officers, and others. Pensions exist to help attract and retain well-qualified public employees.
Public pension funds are underfunded all around the country. The official sum of unfunded pension obligations was nearly $1.4 trillion in 2015.
Pensions are taking up larger and larger shares of state and local government budgets, crowding out other necessary government spending. Current budgets are increasingly being used to pay for retirees, not for active workers or the services we expect from them.
And many worry that unfunded obligations are much larger than what is official reported. Current discount rates hide pension obligations, and the true size of unfunded obligations is even larger than what is being reported. One estimate puts the true size of unfunded obligations at over $3.8 trillion.
Know Your Facts
Once a public sector employee is hired, their pension benefits terms may not be changed.
In 2017, nearly every state and local government has large unfunded obligations – and pension costs were the primary reason.
Most public sector pensions are “defined benefit” plans, unlike retirement plans like 401Ks that are “defined contribution” plans.
The market value of the country’s total unfunded pension liabilities now stands at $3.85 trillion.
Only 59% of Americans are concerned about pension funds. Only 25% of Americans describe pensions as a top priority.
Create a plan for your future
Think you have a solution to the problem? Write a one-page proposal and submit it to Free the Facts. Our experts will review your submission and work with you to help create a plan to fix this national problem.