The Economist is about as far from The National Enquirer as you can get. Its sober, pithy coverage of world political and business news is hard to beat. So when the venerable British magazine (or newspaper in the Brits’ vernacular) pens a lenghty article filled with alarm bells about the poor health of public and private sector pension plans worldwide, it’s worth paying attention.
Here’s the money quote from the article’s section on public sector pensions. But please, do yourself a favor and read the entire piece:
The hole keeps getting bigger. Required public-sector employer contributions have nearly trebled as a proportion of payroll since 2001. But in practice, they have not been paid: since 2006, contributions have been regularly less than 90% of what is due. Closing the deficit will require higher taxes, or benefit cuts. But states and local governments are constrained by laws which say that benefits, once promised, cannot be reduced. Unless markets deliver implausibly high returns, more and more cities and states will be forced to juggle the interests of workers and taxpayers, with angry voices on both sides.