Pensions

Back in the post war years pension benefits were often risky and all too often not there as promised. In 1978 ERISA (employee retirement income security act) was enacted to protect private pensions from default. It did not include public pensions. Pension plans were evaluated yearly to make sure they were properly funded, meaning that they had the ability to pay the promised benefits. Public pensions like government employees and teachers did not have to follow these rules and they did not. The result is many public pensions cannot meet their commitments. This is called being underfunded. There is a fundamental flaw with public pensions. Take any government entity say county employees. People elect the county commissioners and then the county employees negotiate with these elected officials. County employees are active in these elections and normally elect people who are sympathetic to their cause. The result is benefits are provided without proper consideration to funding. A commissioner thinks I can offer these benefits because 30 years from now when payment comes due, I will be long retired. This sort of thing happens across the country and the time has come to pay up and the money isn't there.