Libya Mitchell, Pension Research Center, Warden School discussed on Knowledge@Wharton
They entirety of pension funds are four trillion dollars underfunded, and that is equal currently to the economy of Germany. It's also about one fifth of the current national debt in the United States. It's a significant concern for government employees that a fully funded retirement may not be there for them at a time when the rates for older Americans declaring bankruptcy is on the rise. So where does this leave public employees as they plan for retirement, we ask our guests with a Mitchell executive director of the pension research center and director of the center on pensions and retirement research here at the school. She is also a professor of insurance and risk management as well as business economics and policy and joining us on the phone lira Friedberg whose an associate professor of economics public policy at the university of Virginia. Batten school of leadership amp public policy Libya great seeing you. Thanks for coming in my pleasure thinking. We are great to have you with us today. Thank we've talked about this so many times. But again, this is an issue which feels like it continues to not get enough attention that we have hundreds of thousands of potential people that are going to be affected by this. Well, it's certainly the case that every year that ticks by leads to more reading and more concern because the state and local plans across the country have clearly not done what they should have done to contribute the right amounts to invest their assets in their pension plans, carefully and thoughtfully. And then a older folks are living longer and needing more medical care, needing longer retirement benefits. So it's a, it's a series of challenges, which, frankly, nobody much is paying. Attention to your the the life issues, which alluvia bring up living longer needing more medical care. Obviously, that's part of what we see in our culture right now, but and maybe that's not a changeable asset, but what could have been changeable is how some of these governments kind of plan these things out. Well, yeah, I think it ends up getting kind of built into the system there. There aren't strong incentives for the governments to actually take care of this decades before it becomes a problem. And so then it becomes a problem after years of underfunding, and then some combination of tax payers and state and local government workers bear the cost of that. And so we've already seen that going on the last ten years is seemingly the tax part of this. The one area that I think that that infuriates people at times is the fact that seemingly feels like if there's not enough pension there to be handled the one way. Seemingly is a fix is to be able to tax the consumer a little bit more, taxing the, yeah, increasing taxes or cutting other spending becomes part of the part of the solution. Blaming state and local workers becomes part of it too politically that ends up being easier than than than dealing with the funding listening to knowledge award here on Sirius XM one, thirty, two business radio powered by the warden school, joined in studio via Libya Mitchell of the warden school and Leona Friedberg of university of Virginia..