The Power of Independent Thinking


Stay Connected
Get the latest updates straight to your inbox.


The Immorality of Pushing Pension Debt onto Millennials

A recent study pegged the debt of state and local government pension plans at $4.7 trillion. If politicians and voters fail to adopt reforms, younger people will be stuck paying off a massive and growing debt they did not create or approve.

State and local government workers receive generous defined-benefit pensions that guarantee specific monthly payments to retirees for life. In theory, these pensions are paid for by investing contributions from government agencies and their employees, and using the proceeds to pay the promised benefits after employees retire.

In reality, pension officials and politicians have increased benefit payouts and lowballed contributions. As a result, they now have inadequate funds to pay the promised benefits. This “unfunded pension liability” puts taxpayers on the hook to make up the difference between promises and assets.

Lawrence J. McQuillan is Senior Fellow and Director of the Center on Entrepreneurial Innovation at the Independent Institute, and author of the Independent book, California Dreaming: Lessons on How to Solve America's Public Pension Crisis, he also a contributor to the book Pope Francis and the Caring Society. .

New from Lawrence J. McQuillan!
CALIFORNIA DREAMING: Lessons on How to Resolve America’s Public Pension Crisis
In California Dreaming, Lawrence J. McQuillan pulls back the curtains covering this unfunded liability crisis. He describes the true extent of the problem, explains the critical factors that are driving public pension debt sky-high, and exposes the perverse incentives of lawmakers and pension officials that reward them for not fixing the problem and letting it escalate.