Josh Barro, Columnist

Why Municipal Pension Systems Are a Terrible Idea

February 13, 2013 at 4:42 PM UTC

Josh Barro is the lead writer for the Ticker, Bloomberg View's blog on economics, finance and politics. His primary areas of interest include tax and fiscal policy, state and local government, and planning and land use. Previously, Barro was a Senior Fellow at the Manhattan Institute for Policy Research and a commercial real estate banker at Wells Fargo. He holds a bachelor's degree in psychology from Harvard and lives in Queens, New York.

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(Corrects number of Rhode Island cities and towns in second paragraph.)

Scituate, Rhode Island, population 10,329, operates a pension plan for its police department. The plan is underfunded to the tune of $8.4 million, a liability that has quadrupled since 1999. That doesn't sound like a big shortfall until you realize that Scituate's pension plan has only 33 participants, meaning that it is short by more than a quarter million dollars per employee.