Pension Funds and Highway Investment: A Win-Win Proposition

by Robert W. Poole, Jr.

Two of America’s largest public-sector problems are the massive underfunding of state and municipal employee pension systems and serious under-investment in transportation infrastructure, especially our aging highway system.

The vast majority of public pension funds have not set aside enough money to cover their obligations to retirees. As of 2013, the official figure for all U.S. public pension plans showed them to be only 71% properly funded. But according to finance expert Andrew Biggs at American Enterprise Institute, if those funds were required to calculate their liabilities under the same rules as corporate America, and if market values were used instead of “smoothed” values, the funded ratio would drop to just 41%, and their unfunded liability would be $2.6 trillion.

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About Bill Reinhardt

Editor of Public Works Financing newsletter
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