What started out with the purest of intentions has morphed into a virtual Ponzi Scheme. (Don't take my word for it, here what others say in "Are Pensions Merely Ponzi Schemes?" FiduciaryNews.com, August 28, 2014.)  Truth be told, some states and municipalities have been better fiduciaries regarding the management of their pension plans than others. It only takes one narrow-minded administration, though, to start the ball rolling to ruin.

Once we see the first empty promise of providing benefits today at the hands of tomorrow's taxpayer, it's nearly impossible to halt the momentum of political one-upmanship. It's unrealistic to expect the typical politician to avert their re-election eyes from this budgetary temptation. We must help them help themselves, or they'll bring us all down in a maelstrom of financial decay. 

The New York Times ("New York City Pension System Is Strained by Costs and Politics," August 3, 2014) recently reported servicing current retirees consumes 11% of New York City's annual budget. For Los Angeles, according to the Wall Street Journal, this number is 5%. And that's only current liabilities. The cost of future unfunded liabilities for these two cities alone runs into the tens of billions of dollars. Quite frankly, you don't have to have read (and understood) Ayn Rand's Atlas Shrugged to conclude this kind of math is not sustainable. 

Today Detroit, tomorrow Los Angeles and New York City, beyond that, who knows? Governments cannot create money out of thin air (although some have suggested inflating the dollar as a cure to reduce the burden of these, and other, debts). No, it would appear, in the stark tradition of typical knee-jerk reactionism we so often find in the political realm, the easiest solution is to matter-of-factly ban all public pensions. 

OK, OK. I am a reasonable man. We don't have to go cold-turkey. We can take a few years with this. We don't want to harm current public pensioners (although I wouldn't be against reducing their benefits if they no longer live in the state they earned those benefits in). For those presently in the public pension funnel and within ten years of retirement, their benefits should be frozen and not be distributed until at least age 62 (at a reduced rate), 67 (at a less reduced rate), or 70 (at the normal rate). 

For all others, it's time to join the defined contribution world. 

C'mon in, the water's fine!