Key Facts
Underfunded Pensions
State and local governments all around the country have failed to set aside enough money to pay for the pensions they have promised to workers in the public sector.
Hiding The Debt
Pension funds hide the debt they create by assuming that they’ll achieve relatively high investment returns.
High Rates Of Return
The higher the rate of return they assume, the less likely they’ll achieve that goal over the long run.
Benefits Of Risk-Free Rate
Returning public pension funds to long-run solvency means calculating their investments at the risk-free rate. Doing so would reveal the true cost of future required pension payments and force state and local governments to save more now to prevent tax increases in the future.