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date: 25 August 2019

Abstract and Keywords

This article surveys the landscape of state and local retirement systems and assembles a long list of policy ideas and concerns. On average, public pension funds are in trouble, and the unfunded liabilities promise to strain tight public budgets. But not all systems are having difficulties. Overall, there are many dark clouds on the horizon. What are needed are more realistic actuarial assumptions, setting contribution floors, reducing the generosity of benefit structures, and sharing more costs with employees. States facing severe underfunding of pensions need dramatic reforms. Pensions are only part of the problem: other postretirement benefits (particularly those involving health care) exacerbate the financial trauma that lies ahead. The article notes that the states with severe funding problems face unsavory choices. They should assume a lower rate of return on investments.

Keywords: employee pension, local retirement system, pension funds, public budgets, return on investment, rate of return

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