Policy Brief

Pension Debt: Omaha’s Billion Dollar Problem

The city of Omaha pension system’s two plans are currently facing four problematic trends:

  1. Pension Benefit Promises are Growing Faster than Pension Assets
  2. Omaha Has Been Systematically Underfunding Its Pension Systems
  3. Pension Debt Has Nearly Tripled Over the Last 10 Years
  4. Pension Costs are Consuming More and More Taxpayer Resources

This brief discusses how these trends have been caused by poor actuarial assumptions and irresponsible public policy decisions. Omaha is using an unrealistic assumed rate of return on its investments, and is inappropriately depending on savings from the recently adopted deferred retirement option plan for current employees.

The only real way to reform Omaha’s public employee pension plans is to adopt a new system that is not wholly reliant on the speculative forecasts of financial risk professionals.

Attachments

Anthony Randazzo

Anthony Randazzo is a senior fellow at Reason Foundation, a nonprofit think tank advancing free minds and free markets.

Truong Bui is a managing director of the Pension Integrity Project and senior policy analyst at Reason Foundation.

Leonard Gilroy is vice president of government reform at Reason Foundation and senior managing director of Reason's Pension Integrity Project.