Leora Friedberg, an affiliate professor at EdPolicyWorks, discusses benefit pensions in new Marketplace article.
Many cities and states have established generous pension packages, and now they can’t afford to keep the promise.
“The pensions that run into problems are the defined benefit pensions where it’s entirely up to the employer, the city or the state to put the money into the account and save the money,' said Leora Friedberg, an associate professor of economics at the University of Virginia.
She said what’s happening in cities like Philadelphia is the accumulation of many bad decisions. Cities and states are going to have to move to 401(k)s — packages where the money is saved in an account over time.