Munnell debunks the notion that all plans are in trouble. She finds that while a few plans are basket cases, many are functioning reasonably well.
Munnell’s analysis concludes that the plans in serious trouble need a major overhaul. But, even the relatively healthy plans face three challenges ahead: an excessive concentration of plan assets in equities; the risk that steep benefit cuts for new hires will harm work force quality; and the constraints plans face in adjusting future benefits for current employees.
She proposes solutions that preserve the main strengths of state and local pensions while promoting needed reforms.
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