ABSTRACT
The increasing budgetary stress caused by pensions also brought renewed attention to the costs of these benefits. When cities such as Vallejo, California; San Bernardino, California; Stockton, California; and Detroit, Michigan entered formal bankruptcy at least partly as a result of escalating pension costs, an increasing number of taxpayers and investors became concerned that the traditional pension benefits offered to public employees were no longer affordable. In this entry, we discuss the importance of these pension and Other Postemployment Employee Benefits (OPEB) costs to governments’ budgets. We also delineate the different types of pension systems that exist because these unique structures pool large amounts of capital for retiree benefits and make public pension systems major players in modern capital markets. In 2010, e.g., public pension systems held in excess of $2.7 trillion of assets. OPEB structures tend to be newer since the adoption of GASB 45 beginning in 2007, and governments are still adopting these. Finally, because reform efforts aimed at making these retiree benefits better funded or more affordable are increasingly common, these efforts are classified and highlighted.
