Professors Beware: Public Pension Plans

  Every university professor relying on a public pension plan should read the article on public pension plans in the June 13, 2005 Business Week, "Special Report- Public Pensions".  Most professors use private pension plans (TIAA-CREFF, for example) but many, especially those in public schools still rely on state pension plans.  The Business Week article notes that the 125 largest public pension plans are unfunded by over $278 billion.  States will have to raise taxes, borrow more money, take more investment risks or reduce benefits.  Some argue that the promises once made cannot be broken or modified, even in a municipal or state bankrutpcy.  I am not so sure.  In any event, professors on public pension plans should recognize the risk and diversify their retirement planning.