Virginia Foxx: “At the State and local levels, public employees are often promised defined benefit pension plans that are subsidized…”

“At the State and local levels, public employees are often promised defined benefit pension plans that are subsidized through the tax code and exempt from ERISA's funding, notice, and disclosure requirements. Too often, State and local governments have not kept their end of the bargain and are failing to fund employee pensions adequately. The numbers suggest public employee pensions are dangerously underfunded. Economists estimate that State pension plans are collectively underfunded by as much as $5.8 trillion. According to the Center for Retirement Research at Boston College, public pension funds have on hand an average of just 75 cents for every dollar expected to go to retirees in future benefits. Simply put, there is not enough money set aside to meet retirement obligations. This raises serious questions about the promises that public employers make and the practices they use to address underfunding. I am especially concerned with recent news reports that some States and localities, rather than making responsible decisions to manage their plans, are adopting a risky practice: betting on the stock market with borrowed money. According to The Wall Street Journal, in 2021, more than 100 State, city, and county governments borrowed money for their pension funds and invested in stocks and other investments. Nearly $13 billion in pension obligation bonds were sold last year, which is more than in the prior 5 years combined.…”