What Are Pensions?
Pensions are a retirement benefit offered by some employers so their employees can maintain a certain standard of living after they stop working. Pensions are defined benefit plans, meaning employees receive a fixed benefit based on their salary history and years of service. Employees rarely contribute to pension plans. Instead, the employer covers the total cost of the retirement benefit. Pensions were the most popular retirement benefit for private and public corporations until the 1970s. Now, pensions are the popular benefit offered by government agencies but not private corporations.
Why Do Pensions Matter?
We believe that citizens deserve the truth about their government's financial information. Moreover, government employees deserve the truth about the status of their retirement benefits. A lack of transparency in government financial reporting makes understanding the truth about government pensions difficult. However, when you treat government financial statements and pension plans as private corporations are treated, you find that pension plans are severely underfunded across the nation.
Free Pension Database
To help shine a light on this issue, we created a pension database that allows citizens and government employees to explore the funding status and more information about their state and local pension plans.
Government Pensions vs. Private Pensions
The reason government pensions offer a pension as a retirement benefit to their employees and private corporations do not stems back to a 1974 law called the Employee Retirement Income Security Act or ERISA. The primary purpose of ERISA was to protect the retirement benefits of workers who participate in pension benefit plans, but it excluded government agencies. Learn more about the impacts of ERISA with our blogs linked below.