Public Pension Shortfalls Are Everyone’s Problem
The pension liabilities that helped bankrupt Detroit have cast a harsh light on similar problemsin Chicago and other large American cities, adding urgency to the question of who should close the shortfall. This is a challenge that public-sector workers and retirees shouldn’t bear on their own.
The public pension problem is by now well known. Detroit’s emergency manager estimates its unfunded liabilities at $3.5 billion, about a fifth of the city’s debt. As of last year, Chicago had funded just 36 percent of its pension obligations, while, as of 2011, Philadelphia had put aside just 50 percent of its promised benefits.
States aren’t doing much better. Thirty-four states failed to make their required pension contributions last year, and nine have set aside less than 60 percent of what’s needed. All told, U.S. state and municipal pensions are underfunded by at least $1 trillion, and perhaps much more.