Public-employee pensions put cities, states in tight squeeze - Opinion - USATODAY.com
As Americans slaving away at private-sector jobs have watched their 401(k) retirement accounts pulled down about one-third by the stock market, they might have found some comfort in thinking everyone's in the same boat.
The comfort is not only small; it's false:
More than 80% of state and city government workers are guaranteed a pre-set, generous pension, and most also can retire early.
Such "defined benefit" pensions generally went out of style in private business and the federal government in the 1980s because of their cost.
They're a main reason why cities and counties across the country are in dire financial straits. Vallejo, Calif., filed for bankruptcy protection last year.
El Monte, Calif., narrowly avoided it June 30.
Others are considering it.
In New York City, Mayor Michael Bloomberg said last month that the pension system is "out of control."
Recent stock market declines have left public and private pension plans alike underfunded, but the problem is deeper for public plans because they offer bigger pensions and make them available earlier, particularly to public safety employees. Three-fifths of state-government pension funds owe at least 20% more money than they have. According to the National Association of State Retirement Administrators, the shortfall is $430 billion, or about $3,800 for every U.S. household. Other estimates put the number above $1 trillion
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