General Discussion
In reply to the discussion: 401Ks are a disaster: Column [View all]The biggest complaint I hear about public pensions is with their funding levels. I guess I hear some complaints that they are too generous, but I tend to ignore complaints like that. The funding issue, though, is real in some cases.
In the old days when company pensions were more prevalent, we also had problems with companies not adequately funding those pensions. If the company went bankrupt, the pensioners lost. We fixed that by requiring minimum levels of funding and adding what amounts to pension insurance (although that only covers low to moderate income pension levels).
The rules for public pensions aren't nearly as strict. After all, public entities don't often go bankrupt. Sadly, some areas are using this as a way to "pay" public employees more without it showing up on their budgets. They promise good pensions but, like companies of old, they don't set aside enough money to pay for those pensions. This will lead to much higher government costs for future generations that will result in some combination of higher taxes and/or lower services. It really isn't fair to expect future taxpayers to pick up the costs of current employees. We should require that government agencies fund pensions at the same levels that we require from companies so that taxpayers see the true cost of their civil servants and can make more informed decisions on what level of services they are willing to pay for.