Defined Benefit pensions may be a financial ticking time-bomb for state and local governments.

Traditionally state and local governments have provided their employees with defined benefit (DB) pensions that provide a guaranteed retirement income for life. The market crash of 2008 (combined with other factors like rising life expectancies) have highlighted the extremely high costs of providing government DB pensions.

Now we have a full-fledged public pension crisis underway that is slowly but surely making its way to the top of the nation’s laundry-list of financial problems. Estimates of the unfunded liabilities associated with public DB pensions are staggering: ranging from $500 billion on the low side to over $3 trillion!

More and more, governments are reaching the conclusion that private sector companies reached long ago: the long-term costs and liabilities associated with DB pensions are not sustainable. In the private sector, 401k plans have become the norm – 80% of companies that offer a retirement plan offer a 401k defined contribution plan. In government, 80% of workers still are covered by DB plans.

Are defined benefit public pension plans s time-bomb set to explode?

This site provides resources and tools for government officials and taxpayers that may want to consider transitioning to a DC retirement system model. We believe the a wholesale move to public DC plans is inevitable in coming years. Yet we also understand that there are strong arguments to be made for retaining a DB pension structure. It is important for anyone weighing a change to a DC plan to understand and weigh all the facts. For this reason, we include research and other materials that strongly favor the DB pension model over the DC model.