Are Public Sector Pensions Broken?
04/15/2011 - Government workers worried about retirement should take steps to protect themselves.
The battles in Wisconsin and Ohio between public employees who have guaranteed, often inflation-indexed pensions and taxpayers who lack such generous and dependable retirement benefits could soon boil over into other states.
The frustration and anger behind this conflict isn't hard to understand, no matter where you stand on the issue. Taxpayers hit by joblessness and declining wages are being asked to accept higher taxes and fewer services, in part because of unfunded public employee pension demands. These bills are coming due at the same time workers in the private sector are facing retirement -- often without enough savings or a dependable pension plan of their own.
No matter what side you are on, the shortfall appears daunting. Pew Center on the States, a research and public policy initiative, released a report in 2010 estimating a $1 trillion gap as of 2008 between what public workers have been promised in pensions, health care and other retirement benefits and the money put aside or otherwise available to pay those obligations.
Some economists say part of the problem will disappear when the economy recovers and baby boomers die off, but others argue that Pew is underestimating the gap and no matter how much the economy improves and how many people are no longer collecting, it won't be enough to pay public pensioners all that they are owed.
Read the full article at foxbusiness.com.