Politicians get to calculate the present value however they want today (which always means understating the real cost), and letting the future deal with the problem and playing catch-up to the real costs.
No one cared about this enough so government employee unions and politicians back then got away with underpaying employees in cash (hence reputation of government pay being low), but then give cops and some others 3% final average pay pay pensions including overtime or just averaging the final 3 or 5 years of pay. I have even seen pension plans just use the final year of pay.
The pensions start at 20 years of service, so you can have people earning a couple hundred thousand in their final years in mid 40s or 50s, and then get an annuity worth $200k * 20 years * .03 per year = $120k per year, and then on top of that some even negotiated cost of living adjustments (currently wrecking Illinois’ taxpayers).
Go ask an insurance agent for a quote for an annuity of $120k starting at age 50 until you die and see what they quote you.
They will probably laugh you out of the room.
Add government doctors, lawyers, university management, etc and the costs explode.
This is why looking at government spending over time is an incomplete picture. If a huge chunk goes to retirees and wasn’t 40 years ago, there’s simply less leftover for everything else.
Tax revenue might be higher than ever but net available for programs is down. Thus, the feeling by many that government must be wasting money.
> If a huge chunk goes to retirees and wasn’t 40 years ago, there’s simply less leftover for everything else.
If you are talking about state governments in the US, that's approximately true.
If you are talking about the federal government, it's not, because the idea of a fixed purse is simply false. Spending and revenue are separate policy decisions that don't constraint each other.
Politicians get to calculate the present value however they want today (which always means understating the real cost), and letting the future deal with the problem and playing catch-up to the real costs.
No one cared about this enough so government employee unions and politicians back then got away with underpaying employees in cash (hence reputation of government pay being low), but then give cops and some others 3% final average pay pay pensions including overtime or just averaging the final 3 or 5 years of pay. I have even seen pension plans just use the final year of pay.
The pensions start at 20 years of service, so you can have people earning a couple hundred thousand in their final years in mid 40s or 50s, and then get an annuity worth $200k * 20 years * .03 per year = $120k per year, and then on top of that some even negotiated cost of living adjustments (currently wrecking Illinois’ taxpayers).
Go ask an insurance agent for a quote for an annuity of $120k starting at age 50 until you die and see what they quote you.
They will probably laugh you out of the room.
Add government doctors, lawyers, university management, etc and the costs explode.