Most state and local pension funds turned in stellar performances for the fiscal year ending in June, reflecting a roaring stock market. But as this episode of What’s Ahead makes clear, one great year doesn’t wash away decades of underfunding, poor plan performance and mismanagement.
These pension funds still don’t have sufficient assets to meet future obligations, and markets can have bad years as well as good ones.
A big systemic problem is that these pensions are still defined benefit plans, and the oft-exorbitant promises made by election-obsessed politicians bore little relation to reality. But even a mild reform, such as having new government workers switch over to 401(k)-like plans meets fierce union resistance.
Taxpayers: Clutch your wallets—real and electronic!