More--yes, still more--on government pensions
One might wonder how the pension fund could get away with that. It’s actually simple—just treat expected returns as guaranteed. By assuming no risk that future returns would be lower than projected, Detroit’s pension fund could skim off the top and keep telling the taxpayers that the fund was healthy.
But before dismissing Detroit’s corruption as sui generis, keep something in mind: Governments at every level across the nation pull similar shenanigans. Sure, not many are so brazenly irresponsible as to pay bonuses out of their pension funds, but systematically overvaluing risky assets—e.g., pension investments, student-loan repayments, crop insurance plans—is standard practice in the public sector.
(For more details see "Detroit Spent Billions Extra on Pensions".)
"Struggling, San Jose Tests a Way to Cut Benefits". That's not Detroit, that's San Jose, Silicon Valley San Jose.
Private pensions gradually faded as an issue because many employers with pension plans failed, and newer companies (read: Google) never started them. But the problem with cities and states has mushroomed. As of last year, public plans are unfunded by a cool $1 trillion. Illinois is a poster child: $100 billion in the hole. Plans in Connecticut and Kentucky are in bad shape, ditto Chicago, Pittsburgh, the bankrupt San Bernardino, Calif., and many other cities.
The temptation for governments to negotiate unrealistic benefits was even greater than in the private sphere. Elected officials knew that, by the time benefits came due, they would be out of office. Union officials knew it, too. Once benefits were agreed to, cities and states chose to skimp on funding. Politically, it was always preferable to build the extra school or staff the additional fire station than to squirrel away more pension money.
An answer, from a Reuters source[!], to a current, dopey defense of the government: "Stop Blaming Wall Street: Here's The Real Reason America's Pension [sic] Are Hurting".
"Time to prevent politicians from handing out defined benefit pensions?" Short answer: yes.
Unless you have a printing press for money and/or a direct connection to God who will tell you how long people are going to live and what return on investment can be expected 30 years from now, why would you promise to pay someone, e.g., $150,000 in today’s dollars starting 20 years from now and continuing until that person dies?
Even a Liberal is on board: "Let Pensions Die. Build Something Better". I don't like the proposed solution at all but recognizing the problem is a start.
Finally read where the experts--including the CBO--say this is all leading: "The Shutdown Is a Sideshow. Debt Is the Threat" and "Introducing CFRB's Latest Long-Term Realistic Baseline".