States and municipalities are in deep financial trouble. Pension performance has faltered. Over a trillion dollars worth of municipal pension fund assets have been erased in the recent market meltdown. The average public pension plan is 35% under-funded, and things are getting worse.
A wave of municipal bankruptcies could well follow.
To avoid such a fate, there are three possible responses cities and towns can take to the problem of under-funded pension plans. None of them are appealing. First, it's important to understand that "under-funded" basically means municipalities lack the money in the pot to pay for all the obligations they've made to their employees.
Public Pensions Face Ugly Choices
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