Is A Pension Crisis Approaching?

It seems that every day brings a new story about underfunded public pensions, particularly police and fire pensions. Here's one of today's articles.

With pensions, the devil's in the details. Modest changes in actuarial assumptions as to life expectancy, retirement ages, and expected investment rates of return can have huge impacts on the evaluation of the liabilities of a pension plan. Even with those variables, accounts of pension systems funded at less than 50% of liabilities are downright scary. Unless public governments develop responsible budgeting for pension liabilities, there are really only three alternatives: (1) Cuts in pension benefits; (2) Cuts in other public programs to fund pensions; and (3) Increased taxes.

In light of the controversy swirling around pension benefits, it's interesting to see that Rialto, California has just increased its pension benefits to the "3.0% at 50" model that's become the standard in California. Even with the opposition of a local politician who describes himself as the "Antichrist" of pensions. Link