Solving Our Nation's
Public Pension Crisis:
A Federal Solution to a Critical Issue
Pensions for state and local government workers are an employee benefit that was designed to provide income after retirement and to help those beyond working years to avoid poverty. As an employee works — and earns this benefit — his/her pension plan incurs an obligation to pay out the pension, and employers are to consistently pay into the pension funds as to set aside the money they have promised.
As of the end of 2013, the Pew Charitable Trusts calculated that the 50 U.S. states have a combined total of underfunded pensions at $968 billion – an amount that has since grown significantly – and does not include the underfunded pension debt for other units of local government, including counties, cities, school districts and parks. That pension debt is estimated to be another $1 to $2 trillion.
Despite attempts by state and local governments to solve this problem, it persists. The United States needs a form of federal relief that addresses the excesses of our public pension system, steers us away from municipal bankruptcy and protects plan participants who rely on their pension benefits the most. This relief is not a bailout, but rather a law that would allow state and local governments to reduce benefits under certain conditions and thereby prevent the collapse of troubled funds.