Question

State if you agree or disagree with the summary below and why.

Pensions can be expensive, but in Illinois, they have become a budgetary nightmare. So much so that when a former government employee passed away, I recently overheard a public official working on the budget proposal for the next fiscal year make a sincere, yet alarming sigh of relief. Dark as it may seem, many local and state governments in Illinois are crippled with the expected contributions to future pensions. One pension alone can be a significant strain on budget resources. And maybe that’s the point - many municipalities have opted to underfund pensions while prioritizing other expenditures. That future may not be all bleak, however, as the city of Danville is trying a strategy to overcome the public pension crisis directly (Chricago Tribune, 2017). Last year, Mayor Scott Eisenhauer raised the annual fee for sewer and garbage services from $96 to $267, which in addition to higher property taxes, will hope to meet its 90 percent goal instead of relying on sales tax to fund police and fire pensions. It is unclear if other governments will follow suit, but what remains true is these pensions aren’t going away.

Reference: http://www.chicagotribune.com/news/opinion/editorials/ct-edit-danville-illinois-pensions-20171207-story.html

Answer 1

I agree with the summary because the expenditure upon the pension creates excessive strain upon the government budget and one significant amount of the funds are being spent upon the pension. It creates a problem as the development projects are being under-funded, hampering the growth and development of the society and economy. It has happened due to the following reasons:

1. Lack of proper planning in terms of allocation of funds, the deductions applied to the people at work, meant for the pension issued after the retirement.

2. Poor allocation of funds that could not generate the sufficient wealth to feed itself the requirement of pension distribution

3. Making pension distribution a liability for the government bodies, rather creating a trust and issuing pension on the basis of income generated by the funds that are collected in the name of Pension distribution in the future.

Above reasons are responsible for the challenges being faced by the authorities.