When you read about the enormity of the public sector pension crisis you can't escape the conclusion that the full value of these pensions simply will not be paid.
The political ground is fertile. In August the Los Angeles City Council learned that pensions and health benefits for retirees will gobble up a third of the city's general fund -- up from 8% -- in just five years. In Orange County the chief executive predicted that pension requirements in 2014 will consume about 84% of the county's law-enforcement payroll. The underlying threat? Lay off current cops to pay for the vacations of retired officers. ...Struggling states like Ohio and Illinois face the biggest crisis, as a percentage of GDP, with unfunded commitments totaling about half of those states' economies.
This is déjà vu: Generous retirement packages, enabling middle-age workers to retire early, helped sink Detroit -- eventually landing GM and Chrysler at Treasury's door. The United Auto Workers, of course, negotiated those packages -- and management signed off on them. Now a majority of union members work for the government, and labor is determined to protect its pensions. Unlike those in the private sector, government retirement packages are often embedded in law. Wait until politicians tell that to the taxpayers stuck footing the bill.
If you are counting on a public pension for your retirement I strongly suggest that you begin making other arrangements. These pension promises will not be kept.
