“A $76,000 Monthly Pension: Why States and Cities Are Short on Cash” (nytimes) will, I hope, inspire you to send in those state and local tax checks today!
That states and cities are bleeding out due to their pension commitments is old news (see “Pensions: How states and local governments indulge in deficit-spending” from 2009, for example). What I find interesting are the reader comments. Essentially nobody wants governments to get out of the defined-benefit pension business (essentially acting like a life insurance company that offers annuities). People, presumably most of them private-sector workers with 401k and Social Security, want state and local governments to continue performing this function, but with “reforms.”
My comment on the piece:
Why would state governments be issuing defined-benefit pensions at all? Unless you are God and know exactly when people will die and/or you have a printing press for dollars (like the Federal government does), why would you be promising to send people checks until they die?
Insurance companies can afford to write annuities like this (though usually without an inflation adjustment liability) because if people live longer they won’t have to pay out so much on the life insurance side. But for an ordinary employer to do this is madness (as GM found out!).
Taxpayers should vote to amend state constitutions so that their politicians can no longer moonlight as actuaries. Government workers can have 401k plans like everyone else, plus Social Security for a defined-benefit check (backed up by the Feds, who DO have a printing press for dollars). Maybe government workers will demand higher current compensation if they can’t get a pension worth $millions, but at least the cost would be right out in the open for everyone to see, vote on, etc.
I forgot to add that, to do this right, state and local governments also need a letter from God listing what the returns on various kinds of assets are going to be for the next 50 years.
What would it take to get the American voter motivated to terminate politicians’ rights to do this to them and their children?