Many people, in good faith, depend on promises of “pension systems” for their future. It is a dangerous game to under-fund them. Companies are not allowed to do that.
Of course, the government doesn’t always have the same requirements. They should.
If anything, they should be slightly over-funded.
Public pension funds for state and municipal workers in the United States have accumulated, by most recent estimates, approximately $4 trillion in obligations—roughly one-fourth of U.S. GDP and almost 130 percent of state and local governments’ annual budgets—to fund government workers’ retirements. Actual assets available to fund these obligations, however, total only about $3 trillion, leaving a $1 trillion shortfall that threatens to jeopardize public employees’ retirement security and/or burden the public fiscal situation—potentially squeezing out vital spending on health, education, and infrastructure. In 2014, for example, California governor Jerry Brown signed legislation that will require school districts to increase funding for teachers’ pensions from less than $1 billion in school year 2014–15 to $3.7 billion by 2021. The City of Peoria, Illinois, has seen the share of property-tax receipts that it spends on pension costs swell, from 18 percent in the early 1990s to 57 percent in 2015.