1. Discount rate of 0.04.
2. Uniform payments of the entire $2 trillion over the next twenty years.
That's like expecting congress not to vote itself a pay raise or put themselves on regular health care like average people - it will never happen.
From what I have read, all sorts of games are played with pensions to make sure they are as high as possible, like giving people high salaries for their last few months, etc.
Why are pensions anything more than a minimum survival payout I would like to know? They should set a maximum cap of $10k per year per person if taxpayers have to pay it.
They'll switch to defined contribution with lots of contribution.
Note that the typical career path for politicians involves other govt jobs, not "in office forever". (State universities are a favorite place to end up. CA has lots of boards and commissions.)
> Why are pensions anything more than a minimum survival payout I would like to know? They should set a maximum cap of $10k per year per person if taxpayers have to pay it.
That's unreasonable, but defined contribution isn't. That's pay-as-you go, so there's no liability.
I suppose it could be done but you'd have the challenge of trying to convince and rally a young generation while taking on huge unions/lobbies. Not good odds.
I think it's also important to note that these are state issues. My guess is people will simply move out of some of these irresponsible states once tax rates hit a tipping point.