[quote=pri_dk][quote=CA renter]The largest pension funds are obligated to pay out benefits according to contracts, but most of their funding is NOT from “taxpayers.” Employees pay a portion, employers pay a portion, but the majority comes from investment returns. If the investment returns end up being insufficient, they can always extract more from the employees.[/quote]

No, they cannot. That’s the fundamental problem. And you got it completely wrong.

Your first sentence above contradicts the last one. The pension funds do not have to extract from the employees because the contract specifically states how much employees must pay in. If the state goes back to the employee to make up the shortfall, it is a breach of contract, and the employee unions will be quick to point that out.

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Wrong. The pension funds can require higher employee contribution rates. It can either be done through contract negotiations between the employer and employee unions (in some cases), or it can be done through legislation.

I’ll go into the relationships between the employers, employees, and pension funds — in order to explain how the obligations work — later tonight.