They are public employees in state and local governments, ranging from teachers to cops. Most collect guaranteed pensions provided through state and local taxes and their own contributions and investment returns. Overall, 90% of public employees enjoy a defined-benefit pension, compared with only 20% (and falling) of the private work force.
Even though the commitment is there, the money isn't. A study by analysts at Barclays Global Investors in San Francisco estimates that public-employee pension funds in the U.S. are short $700 billion. That's more than all state and local governments collected last year in property, sales and corporate income taxes combined. As a result, many employees in the private sector will get hit with a double whammy: while their pensions erode, increasingly they will be hit with cuts in government services and forced to pay higher taxes to cover the pensions of public employees, the kind they can only dream about. In three-fourths of the states, public pensions even come with annual cost-of-living increases, a fringe benefit absent from private pensions.