[pjschlic]

1) A major difference is the fact that currently they are generally 'unfunded' in that the money isn't actually invested on your behalf.

2) The next is where the risk resides - even in cases where they are fully funded (ie: some model suggests that the returns on investment will be able to pay out obligations), there's still the issue of the risk models are wrong or investments underperform -that risk will still reside on the state to pony up the difference.

3) Lastly is the highly speculative nature of the obligation - most all pension plans use a subset of the worker's last years to determine the defined payment, so a common practice became to inform your (district, organization) that you intend to retire in 5 years, where they will then boost your pay for your last few years, thus providing a much larger pension. This esoteric issue is possibly dominating Illinois' financial problems as (from a few articles I read) retirees are receiving many times returns-compounded contributions, since their last 5 years are boosted so much over their average pay over the whole career. Gaming the system was not accounted for in the models.

[ghostly_s]

> most all pension plans use a subset of the worker's last years to determine the defined payment,

This is absurd. Why wouldn't it be calculated on lifetime compensation?