When a promise is not a promise

Chicago-style pensions

Research output: Contribution to journalReview article

1 Citation (Scopus)

Abstract

Cities and states around the country have promised their workers - most often teachers, police officers, and firefighters - retirement benefits, but have in many cases failed to set aside adequate assets to fund those benefits. Several of these pension plans are predicted to become insolvent within the next decade and innumerable additional plans appear headed for insolvency in the decade that follows. Once insolvency occurs, pension benefits due to retirees will either have to be paid out of the government's cash on hand, or simply not be paid at all. Based on their current financial positions, most jurisdictions appear unable to fund pension benefits while maintaining essential governmental services, unless taxes are raised significantly. Tis Article is the first to examine whether and to what extent retirees will have effective legal recourse to secure the payment of their pensions in the event of retirement plan insolvency - a critical issue not only for pensioners, but also for taxpayers. It concludes that law is unlikely to provide effective recourse for retirees due to the inability of courts to force legislatures to appropriate funds, raise taxes, or incur debt. As a result, even in cities and states with apparently iron-clad legal protection for pension benefits, pension fund insolvency leaves payment of benefits in doubt, with any solution resting solely with the legislative branch. Understanding that it is politics, not law, that will play the primary role in solving the public pension problem is critical knowledge for all interested parties as they work toward a fair solution.

Original languageEnglish (US)
Pages (from-to)356-413
Number of pages58
JournalUCLA Law Review
Volume64
Issue number2
StatePublished - Feb 1 2017

Fingerprint

insolvency
pension
retiree
pension fund
recourse
retirement
taxes
legal protection
Law
police officer
indebtedness
jurisdiction
assets
worker
politics
event
teacher

Cite this

When a promise is not a promise : Chicago-style pensions. / Monahan, Amy.

In: UCLA Law Review, Vol. 64, No. 2, 01.02.2017, p. 356-413.

Research output: Contribution to journalReview article

@article{12c41417c6604a6782e3cc8d5ad7adc9,
title = "When a promise is not a promise: Chicago-style pensions",
abstract = "Cities and states around the country have promised their workers - most often teachers, police officers, and firefighters - retirement benefits, but have in many cases failed to set aside adequate assets to fund those benefits. Several of these pension plans are predicted to become insolvent within the next decade and innumerable additional plans appear headed for insolvency in the decade that follows. Once insolvency occurs, pension benefits due to retirees will either have to be paid out of the government's cash on hand, or simply not be paid at all. Based on their current financial positions, most jurisdictions appear unable to fund pension benefits while maintaining essential governmental services, unless taxes are raised significantly. Tis Article is the first to examine whether and to what extent retirees will have effective legal recourse to secure the payment of their pensions in the event of retirement plan insolvency - a critical issue not only for pensioners, but also for taxpayers. It concludes that law is unlikely to provide effective recourse for retirees due to the inability of courts to force legislatures to appropriate funds, raise taxes, or incur debt. As a result, even in cities and states with apparently iron-clad legal protection for pension benefits, pension fund insolvency leaves payment of benefits in doubt, with any solution resting solely with the legislative branch. Understanding that it is politics, not law, that will play the primary role in solving the public pension problem is critical knowledge for all interested parties as they work toward a fair solution.",
author = "Amy Monahan",
year = "2017",
month = "2",
day = "1",
language = "English (US)",
volume = "64",
pages = "356--413",
journal = "UCLA Law Review",
issn = "0041-5650",
publisher = "American Statistical Association",
number = "2",

}

TY - JOUR

T1 - When a promise is not a promise

T2 - Chicago-style pensions

AU - Monahan, Amy

PY - 2017/2/1

Y1 - 2017/2/1

N2 - Cities and states around the country have promised their workers - most often teachers, police officers, and firefighters - retirement benefits, but have in many cases failed to set aside adequate assets to fund those benefits. Several of these pension plans are predicted to become insolvent within the next decade and innumerable additional plans appear headed for insolvency in the decade that follows. Once insolvency occurs, pension benefits due to retirees will either have to be paid out of the government's cash on hand, or simply not be paid at all. Based on their current financial positions, most jurisdictions appear unable to fund pension benefits while maintaining essential governmental services, unless taxes are raised significantly. Tis Article is the first to examine whether and to what extent retirees will have effective legal recourse to secure the payment of their pensions in the event of retirement plan insolvency - a critical issue not only for pensioners, but also for taxpayers. It concludes that law is unlikely to provide effective recourse for retirees due to the inability of courts to force legislatures to appropriate funds, raise taxes, or incur debt. As a result, even in cities and states with apparently iron-clad legal protection for pension benefits, pension fund insolvency leaves payment of benefits in doubt, with any solution resting solely with the legislative branch. Understanding that it is politics, not law, that will play the primary role in solving the public pension problem is critical knowledge for all interested parties as they work toward a fair solution.

AB - Cities and states around the country have promised their workers - most often teachers, police officers, and firefighters - retirement benefits, but have in many cases failed to set aside adequate assets to fund those benefits. Several of these pension plans are predicted to become insolvent within the next decade and innumerable additional plans appear headed for insolvency in the decade that follows. Once insolvency occurs, pension benefits due to retirees will either have to be paid out of the government's cash on hand, or simply not be paid at all. Based on their current financial positions, most jurisdictions appear unable to fund pension benefits while maintaining essential governmental services, unless taxes are raised significantly. Tis Article is the first to examine whether and to what extent retirees will have effective legal recourse to secure the payment of their pensions in the event of retirement plan insolvency - a critical issue not only for pensioners, but also for taxpayers. It concludes that law is unlikely to provide effective recourse for retirees due to the inability of courts to force legislatures to appropriate funds, raise taxes, or incur debt. As a result, even in cities and states with apparently iron-clad legal protection for pension benefits, pension fund insolvency leaves payment of benefits in doubt, with any solution resting solely with the legislative branch. Understanding that it is politics, not law, that will play the primary role in solving the public pension problem is critical knowledge for all interested parties as they work toward a fair solution.

UR - http://www.scopus.com/inward/record.url?scp=85018188142&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85018188142&partnerID=8YFLogxK

M3 - Review article

VL - 64

SP - 356

EP - 413

JO - UCLA Law Review

JF - UCLA Law Review

SN - 0041-5650

IS - 2

ER -