Our pension situation is not a crisis in the sense that pensions will suddenly run out of money or not be able to pay benefits. - Don Washington – Paul Krugman – Dean Baker – Richard Wolff – Joseph Stiglitz
Good people as the year ends and various bankers, conservatives, libertarians and Sith Lords are saying that public pensions are going broke are in crisis; remember that they are lying. Public pensions have been in a seventy year “crisis”. People, if something has been a crisis for seventy years its a lot of things but one of the things it isn't is a crisis. If you read no further than the next two paragraphs you can stop but I advise you go further, I have some great one-liners in this thing.
The Cold Hard Truth
Here's how pensions work and here's why they are not going to suddenly run out of cash and go broke. In fact here is why they have not run out of cash and gone broke for the seventy year crisis that they have been in. See, all defined benefit pensions pool the savings of people and at any given time the outlays to cover retirees are always a small percentage of the present assets. Still, there is always someone a few IQ points away from needing permanent assistance who will say that the coming glut of Baby Boomers is a demographic timebomb that will destroy pensions. This is a lie. To begin with all the people retire at different times not all once so the fund is never stressed as if there is a run on a bank. So there is always time to find the money to fund pensions. The question is where does that money come from? But let's indulge the stupid and say that against all odds every year, every Baby Boomer who could retire did so all at once on the same day. Defined benefit plans are "pre-funded" meaning the retirees have already paid into the system. The issue would be what happen to the people retiring AFTER them not them. That is is the issue we are facing now. We have decades to raise the revenue to meet the obligations that we have promised to meet.
Secondly, the only way a pension can die is if the entity responsible for it kills it. They can do so by not making payments to it via pension holidays and other deferments on payment. This underfunds the pension. Then they can shrink the number of public workers paying into the pension, which further underfunds the pension fund. Then the public body engages in risky "alternative investments" i.e. partial privatization for potentially higher returns and of course higher risk like 2008... which is how we got here in the first place. These alternative vehicles also drains assets out of the pension fund due to high fees to various middle men. The governing body can shift from a defined benefit  system to defined contribution plans that dilute the stability of the pension pool. Then finally creating a two-tiered pension structure. All of the above DEFUNDS the pension plan and leads to the pension plan collapsing. This is the point where you realize that everything I just wrote are the "solutions"  that Mayor Emanuel and his campaign investors have been suggesting we do to meet the fantasyland crisis I referenced before. Now you can stop reading if you want.
The Incredibly “Easy” Solution
For those of you who have continued lets remember what the people Rahm and Rauner want to give to our pensions to havealready destroyed private pensions they  just want to loot the public ones now because the one word in these people's vocabulary that never changes is MORE.  Last week I advised you that you were to start “slapping the taste out of the mouths” of anyone who ignorantly says that pensions are going broke and are in a crisis because it's the only way to make sure you have their attention and train them to stop spreading this ignorance. Some of you wrote to me with a simple question... But Don, what do we say about pensions after we have their undivided attention? What the hell are the solutions? 
Focus on the Right Damn Problem!
Fair questions, first we do NOTHING Mayor Emanuel or SB1 suggests unless you want to eliminate public services and hand billions of dollars over to the financial sector so that they can buy villas on the moon and extra blow and hookers with the money. Focusing on pension liabilities instead of the percentage of the state's GDP the pension comprises is like worrying about how salty the ocean is instead of the advancing sharks. You see liabilities tell you what you owe but the state's GDP tells you how much money you, as a government, can access to meet those liabilities. Over a thirty year span making up the difference is not all that daunting. According to the National Association of State Retirement Administrators here is what we face. The IL. Teacher's Fund is at .19%, the Municipal Fund is at .03%, the University Fund is at .07% and the SERS fund is at .08% of future state income. Finding this money over time is not an issue. Taking  it from say the Chicago Mercantile Exchange, Caterpillar or ADM is.

Deploy the Principal of Intergenerational Equity
Last week I explained this to you. The idea is that every generation holds the assets and resources of the city, state, country, world in trust for future generations. You might be asking how can the idea of sharing solve our pension problem? Fundamentally our pension issue is one of fairness. Are we going to renege on promises made to past public servants and reduce our public services on our way to transmuting our public commons into a series of market places? Because we could do that and organize our society completely via market forces or are we going to continue to live by a social compact that says that some services serve higher values than profit?
If we are going to save our pensions we have to reverse thirty years of tax shifting. This is the process where taxes have gone from corporations on to people and then from rich people to the middle class. Here in Illinois 2/3 of all corporations pay no taxes and 80% of our state revenues come from people while only 9% comes from corporations and they think that they are paying far too much while demanding to pay even less. Fairness says that the government has to live up to its obligations and here's the deal. Governments tax, pass and enforce laws and invest to create revenue; it's how they solve problems; if they are interested in doing so fairly.
So it comes down to the brass tacks of putting enough money into the system by garnering it from where it is presently concentrated. Illinois is one of the fifteen wealthiest states in the country and the top 1% income earners in Illinois earned at least 635% more than the median employed worker here in Illinois. So a mix of Tobin taxes; think of it as a gradient scale of taxes instead of soaking the population with fee after fee. We could have one on electronic trading, one on all financial transactions over a certain amount, one on trades that don't have any redeeming societal function i.e. it's just money making money with no product or jobs being created here in the state or the city. We could even go crazy and reinstate our corporate Mayoral Tutorial - Pensions for Citizens: