Public Pensions and Employer/Labor Relations Management Essay

Public Pensions and Employer Relations
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Public Pensions and Employer Relations
Public pensions are underfunded primarily because of their budgetary costs. Notably, providing public pensions does not lead to immediate profits or payoffs for the politicians and therefore, they tend to prefer to invest in other profitable ventures rather than for pension plans. Another reason for underfunding is that politicians use public pensions as means of buying votes during elections whereby state employees have their pension benefits increased while leaving out other individuals. They do this with the knowledge that the budgetary costs at the time are usually low. The other reason is that underfunding of public pensions is something that union representatives accept after agreeing with politicians whereby they give the impression that there was full funding when in reality the pension plans were underfunded.
Considering that public pension is political, there are a number of steps that can be taken to help remedy the situation. One step is for ...