Double, double toil and trouble; fire burn and cauldron bubble...
There’s nothing scarier than the systemic failure of our nation’s public pension systems—and no one is spared. Estimated at $5 trillion, U.S. public pension debt is the shadow lurking at your door, slowly creeping up behind you. The nation’s failing pension systems are responsible for higher taxes, reduced government services and, in some of the worst cases, reductions in pensioners’ promised retirement benefits. And that’s scary stuff.
Growing pension costs are resulting in tremendous budget challenges for state and local governments. Just look at the recently released study by Stanford University examining California's unfunded pension promises and how the pension crisis is impacting city and county governments and school districts. In many cases, the state's police, fire and other critical public safety services have been reduced to pay increasing pension costs. Other services, such as public health, public assistance and transportation, are especially being hit, as well as libraries and recreational services. School districts, too, have been dealt a blow with cuts in operating expenses and staff reductions.
Just as scary, rising costs and the continual underfunding of pension systems are threatening the solvency of public employee retirement plans, putting at risk the hard-earned savings of many workers. RSI believes that all workers deserve safe and secure futures and retirement plans should place employees on a path to a secure retirement. It shouldn’t be a case of trick-or-treat: retirement benefits should be fair, sustainable and predictable.
Although today’s pension crisis is due to past policy decisions made by legislative bodies that created unsustainable systems, current policymakers can change the tide. For example, policy leaders in both Pennsylvania and Michigan faced the challenge head on this year and passed meaningful pension reform. Further, leaders in Kentucky are currently working hard to reform their broken pension system and stop the state's $37 billion pension debt bleed before it's too late.
Don’t be tricked this Halloween. State and local governments have a responsibility to provide essential services that protect the welfare and quality of life for all Americans—services that will be reduced as public pension debt continues to skyrocket. Governments also have a responsibility to fulfill their pension promises to public employees. After all, there are many things that frighten us, but our retirement futures shouldn’t be one of them.