Chapter 4: Public Sector Retirement Systems: Change or Consider Bankruptcy?

Although employer-provided retirement systems are relatively recent in the private sector, dating from the late 19th century, public sector plans go back much further in history. From the Roman Empire to the rise of the early-modern nation state, rulers, and legislatures have provided pensions for the workers who administered public programs. Military pensions, in particular, have a long history, and they have often been used as a key element in attracting, retaining, and motivating military personnel. In the United States, pensions for disabled and retired military personnel predate the signing of the United States Constitution (Craig, 2003).

In the United States, public sector pensions are provided by federal, state, and local government including cities, counties, and special districts established by state legislatures. The retirement programs are generally funded by contributions made by both the employee and the employer.