Public Sector Pensions

Public Sector Pensions

Research

Eileen Norcross | Feb 05, 2013
The sustainability of public sector pension plans is an issue of great fiscal concern for state and local governments in the United States. According to government reports, state public sector pension plans confront a total unfunded liability of $842 billion. Underfunding of this magnitude presents a serious fiscal problem for individual governments and will require a growing amount of budgetary resources to fund benefit promises to retired workers.
Jeffrey Miron, Robert Sarvis | Feb 13, 2012
This paper examines the fiscal health of the states, focusing on two worrisome characteristics: an understatement of unfunded pension liabilities and ever-increasing expenditures, driven primarily by health care costs.
Eileen Norcross, Benjamin J. VanMetre | Nov 08, 2011
This working paper shows how Rhode Island’s state and municipal pension systems face large and growing unfunded pension liabilities and provides recommendations for reform.
Eileen Norcross, Roman Hardgrave | Sep 28, 2011
This study focuses on public sector benefits costs in the state of New Jersey. Along with several other states, New Jersey’s pension system is badly underfunded and health care and other benefits for public sector workers are entirely unfunded.
Scott Beaulier | Sep 26, 2011
This paper explores the current state of public pensions across the United States and addresses transition cost and capital flight concerns.
Jeffrey Miron | Aug 15, 2011
This paper examines the fiscal health of the U.S. states by taking a look at state and local debt, including unfunded pension liabilities.

Testimony & Comments

Research Summaries & Toolkits

Speeches & Presentations

Expert Commentary

Aug 11, 2014

Lasting pension reform has three pieces: 1) Fund the benefits earned to date. 2) Stop the bleeding and close the current defined benefit plan. 3) Switch workers to a defined contribution-style plan that could include an annuity option and the features of a traditional pension that public sector workers prefer.
Jun 27, 2014

Across the nation, states and cities are struggling to keep up with their obligations to fund state worker pensions. Detroit--desperately trying to reduce its obligations in federal bankruptcy court--is the classic example. But the financial sinkhole swallowing Detroit is spreading throughout the country at an alarming rate.
May 27, 2014

The once "sure bet" of a public pension has become a roller coaster ride for American governments, employees and taxpayers. Alabama is no exception; despite recent reforms, its pension plans are at risk of running out of money in the next 10 years.
Mar 12, 2014

Wouldn't it be great if you could just decide that your monthly cellphone bill was too high and only pay half? That might work for a while, but eventually Verizon or AT&T would turn off your phone. Municipal governments have been trying the same thing with their pension bills, and it hasn't gone well. One result is a spate of municipal bankruptcies from Rhode Island to California, including Detroit's dramatic filing last year.
Dec 05, 2013

Judge Steven Rhodes’ ruling that Detroit may reduce pensions under Chapter 9 bankruptcy now means that all parties must face a hard mathematical reality with consequences for real people: The city cannot afford to pay the benefits it has promised. Detroit’s unfunded pension liabilities are immense, at over $9 billion on a risk-free (guaranteed-to-be-paid) basis. Unfortunately, they were valued and funded incorrectly.
Dec 05, 2013

Illinois’ pension problems are big—far bigger than the $100 billion funding gap the legislature said it tackled earlier this week with a new set of reforms. The funding gap is actually double that—well over $200 billion—when calculated on a fair-market basis. Illinois is committed to fully funding the actuarial liability (and some are encouraging the system to sue the state should the government not pay it). This is one of the reasons the state is in such a hole—they are well behind on payments, and those payments are calculated based on the overly optimistic expectation that they will earn 8 percent a year on investments.

Charts

Experts

Podcasts

Eileen Norcross | May 20, 2014
Eileen Norcross Discusses Alabama's Pension Funds on the Matt Murphy Show

Recent Events

Mercatus Center budget scholars will share their academic research and practical knowledge with local thought leaders in a half-day seminar hosted by the Bluegrass Institute in Lexington, Kentucky.

Media Clippings

Eileen Norcross, Matthew Mitchell, | Jul 23, 2013
Detroit reports an unfunded pension liability of $634 million, but using more accurate accounting methods it's closer to $3.5 billion.
Eileen Norcross, Jerry Brito | Oct 01, 2012
Eileen Norcross and Jerry Brito cited on Virginia Watchdog discussing public pensions.
Eileen Norcross | Aug 30, 2012
Eileen Norcross cited discussing high risk financing.
Eileen Norcross | Jul 11, 2012
Eileen Norcross is quoted in the guardian discussing the straining budgets of state and local governments in the U.S.
Eileen Norcross | Jun 15, 2012
Eileen Norcross explains the effect changes will have on New Jersey's pension liability.
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