UNDERFUNDED / OVERGENEROUS PUBLIC PENSION PLAN UPDATE: US States’ Pension Bill: $2.5 Trillion.

Two and a half trillion dollars: That’s the most recent estimate for US states’ total unfunded pension liabilities. . . .

Pennsylvania Governor Tom Corbett (R) is one of the Governors leading a charge to change his state’s defined-benefit system to a defined-contribution one modeled on the 401(k). We’re not sure this is the panacea that will finally get “politics out of pensions” for good, as Benefield predicts, but removing the ability of lawmakers to pile on benefit after benefit for years while leaving it to their successors to pay the bills would go a long way toward helping public workers, taxpayers, and state finances.

The big losers in this shift would be public employee unions, who would lose some ability to bargain for better benefits. But what’s bad news for unions isn’t necessarily bad news news for union members, who after all are the ones who suffer most when states and cities can’t afford to pay out pensions as promised.

Indeed.