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The Pension Crisis: What Happens When the Authorities Give Up? | John Moorlach

According to a recent report by the American Legislative Exchange Council, California’s unfunded pension liabilities are estimated to be at $1.5 trillion—about $38,000 of debt for each Californian.

What are unfunded pension liabilities, and why do we have so much of it?

We guarantee that our government employees will receive a set income at the time of retirement. In some cases, people get up to 90 percent of their current pay for the rest of their life, and there as adjustments for the cost of living. This promise to the employees requires cities to invest enough money into their retirement accounts now, and also requires these investments to perform according to plan. Most of the time neither is achieved. Since California’s pension benefits are very generous, it is hard for cities to keep up with the costs.

Are these pension payments realistic, or will California face a pension crisis in the near future?

To understand more about the pension liabilities we are facing, I sat down with former California state Sen. John Moorlach. He served on the California Senate Public Employee Retirement Committee.

He discussed with me the impact of unfunded pension liabilities on cities, and why he believes we are not dealing with the liabilities.

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