From the Editors February 7, 2011 Issue

Defusing the pension time bomb

The Editors

Twenty-seven million. That’s the total of current and retired American government workers at the state and local level. The vast majority of them either will be or already are collecting a pension guaranteed for life. Many of these pensions assure retirees of a comfortable retirement. Some of them go beyond comfortable. For instance, some former police officers, still in their early 40s, now collect pensions in excess of $100,000 a year. A few annually exceed $200,000. Adjustments are possible for future workers. But for the most part, there’s no scaling back of pensions for either current employees or current retirees. Blame and finger-pointing abound. 

Where is all that money going to come from? Nobody knows. Since the stock market drop and the financial crisis of 2008, projected revenue streams aren’t what they used to be. The total pension obligation to state and local government employees now creates a shortfall of around $3.4 trillion. Taxpayers are on the hook for it. 

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