[hash872]

Cities & states frequently offer absurdly generous pensions to public sector workers for political payoff or corrupt reasons. State workers can sometimes retire in their 50s with a lifetime of absurd benefits. Or, the infamous '13th check' where some innumerate officials mail pensioners one extra check in a given year when the pension does especially well financially- literally robbing from the fund's future. Many state & city pensions are underfunded because they are simply too generous.

Public sector collective bargaining is fundamentally different from private sector. Benefits can't get too generous in the private sector because the bargaining is zero sum and the companies are rational- they can get absurdly generous in the public sector because the payers (politicians) are spending taxpayers' money and not their own. There's little incentive to think about the future

[throwaway5752]

First, you are overstating how generous public pensions are (and grossly overstating the differential in administration of private and public pensions).

Second you think private sector pension planning is better. It is not. Pension funding reduces earnings (and bonuses) and companies will use overly optimistic pension fund growth projections to reduce current contributions, resulting in underfunded private sector pension plans. A great example of how this is handled is Patriot Coal (pension obligation spinoff of Peabody) and Magnum Coal (similar spinoff of Arch, acquired by Patriot). Those were spun off basically insolvent, with all pension obligations, and when the declared bankruptcy the retirees took haircuts and the remaining obligations were socialized with the PBGC (which I suggest you look into if you are interested in public and private defined benefit plan administration analysis).