Underfunded pension obligations have been an ongoing fiscal strain on state and local budgetary governments. There is a history of pension underfunding that in part relates to earlier accounting standards, as discussed previously. As underfunding continues, a number of states are re-examining approaches topension reform that incorporates greater fiscal discipline in the form of COLA triggers, hybrid plans, and other means of increasing contributions or reining in costs.
After completing readings answer the following questions:
1.Discuss the factors that have contributed to underfunding of public pensions, as laid out in the reading by Thom and Radazzo (2015). Reflecting on what you have learned, what types of changes would you consider making to address underfunding.