


(from biggovernment.com)For years, employers in the private sector have been moving in the direction of versatile, 401(k) style retirement accounts. However, a vast majority of the 20 million state and local government workers in the U.S. have kept their generous, defined-benefit pension plans.
Despite the lofty promises made by policymakers, public employee retirement plans have been neglected over the years and have become huge liabilities that severely threaten the financial health of many states. If legislators do not properly address the crisis in public pensions, they will make current state budget problems look trivial. In fact, as of 2006, states had accumulated nearly $360 billion in unfunded pension obligations, according to a new 50 state study conducted for the American Legislative Exchange Council (ALEC). The report entitled “State Pension Funds Fall Off a Cliff,” is co-authored by Dr. Barry Poulson of the University of Colorado and Dr. Arthur P. Hall of the University of Kansas.
Much of the current data regarding liabilities in public employee pensions was taken before the recent economic downturn, and the study’s authors warn the problem is much worse today since stock market losses have not been fully realized in many official government pension statistics. Other estimates with recent data place the unfunded pension liabilities at $1 trillion nationally.