I have penned several articles about the dangers the current pension system is in across the nation. The problem is in both the private and public sectors. Many companies like Google refuse to offer pensions because they realize the danger in making a life time commitment to people, when it is impossible to know how long they will live. Estimates of underfunded pensions run from a few hundred billion to several trillion dollars. To read a great book on the topic check out While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis by best selling author Roger Lowenstein. Since the pensions are guaranteed we the tax payer will end up paying for it. How we will come up with the money I am not sure, maybe we can ask China for some more help. Below is an excerpt from an article from the Economist regarding this danger:
SOMETIMES a website can catch the zeitgeist, as condoflip.com did during the housing boom and the implode-o-meter did during the bust. One of the big issues in the next few years is bound to be pensions, particuarly those in the public sector. So I was intrigued to come across the pension tsunami website which does a good job (albeit with a right-wing slant) of collating news stories about the issue. It also has a Californian tinge but then California always seems a few years ahead of everyone else.
Read it and weep at some of the largesse that has been showered on public sector employees at the tapayers’ expense, including the 9,111 Californina retirees who take home more than $100,000 a year in pensions. One lucky devil even gets more than $500,000, after a career in charge of Vernon, a city with fewer than 100 inhabitants. Because public sector pension funds are so much in deficit (one estimate is $1 trillion, another is $2.5 trillion) and because state budgets are so constrained, politicians are facing the choice of maintaining pensions or maintaining local services. In LA, one official has estimated that a third of the budget will be devoted to pension costs by 2015.
The full link is here.