Pension Debt: Omaha’s Billion Dollar Problem

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.

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Anthony Randazzo

Anthony Randazzo is director of economic research for Reason Foundation, a nonprofit think tank advancing free minds and free markets. His research portfolio is regularly evolving, and he maintains a wide interest in economic policy at both a domestic and international level.

Truong Bui is a policy analyst at Reason Foundation, where he works on the Pension Reform Project.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.