A showdown is looming over whether commitments made to retirees by government pension funds can be scaled back in dire economic times.
Facing shortfalls, some public pension funds are responding by paring back payouts pledged to retired workers. Earlier this year, pension funds in Colorado and Minnesota curtailed annual cost-of-living increases.
“No matter how draconian you got on the new hires, you ran out of money” if you didn’t cut benefits to current retirees, said Meredith Williams, chief executive of the Colorado Public Employees’ Retirement Association, with $34.2 billion in assets.