According to a recent report by the American Legislative Exchange Council, California’s unfunded pension liabilities are estimated to be at $1.5 trillion—about $38,000 of debt for each Californian.
What are unfunded pension liabilities, and why do we have so much of it?
We guarantee that our government employees will receive a set income at the time of retirement. In some cases, people get up to 90 percent of their current pay for the rest of their life, and there as adjustments for the cost of living. This promise to the employees requires cities to invest enough money into their retirement accounts now, and also requires these investments to perform according to plan. Most of the time neither is achieved. Since California’s pension benefits are very generous, it is hard for cities to keep up with the costs….