Public Pensions Gone Bad

by: FinancePM10b

Wednesday, I came across an article in the NY Times showing an example of how public pension funds are in turmoil. Prichard, Alabama stopped sending pension checks as the fund ran dry.

The article cites examples of retired public workers now doing just about anything to stay on their feet. Although this is an extreme example, this should serve as a warning, and wake up call to states that they need to act fast. Many states and major cities are taking bold measures to keep their pension funds sustaining, but in only a matter of time, will such risks backfire if more structural changes aren’t implemented?

Do the math, paying out more than taking in is not a friendly dynamic. Over the next few years, the state of public pension funds will make headlines, tying in with the dilemma behind social security.