According to Powers, “While Connecticut is the worst, this is a ubiquitous problem. The pension crisis is largely created by a set of poor incentives inherent to defined benefit plans. Politicians, union representatives, and fund managers all share a perverse incentive in underestimating the pension liability.”
In addition, Powers said, “The most effective way to prevent Connecticut’s pension crisis from deepening is to remove the state’s ability to underestimate its liabilities by switching new hires to a defined contribution plan.”
ALEC did not reflect Connecticut’s change of discount rate in its 2017 report, which relied on the state’s latest valuation.
