Olivia Mitchell on the future of defined benefit pensions

Steve Forbes’ interview with Dr. Olivia Mitchell of Wharton on the health and future of defined benefit pension plans raises a few points worth considering for policymakers and beneficiaries:

  • Public pension liabilities are undervalued and thus underfunded.
  • In general, future retirees including Baby Boomers, face a “much more fragile retirement” than the previous generation.
  • Be concerned as public plans try to make up for losses with riskier asset portfolios.
  • The fiscal burden of public plans will put immense pressure on several major cities and states including Philadelphia, Chicago, Illinois and Hawaii.
  • Public sector transitioning to a 401(k) doesn’t solve the problem of the expense of past negotiated benefits.

Dr. Mitchell also speaks on the topic of Social Security reform, longevity, 401(K) plans and annuities. You can watch the interview here: