When Detroit declared bankruptcy last week, city workers had a very personal reason to be dismayed. They discovered that their retirement plans, their pensions, are not as solid as they thought. Detroit’s $18 billion of debt includes pension obligations estimated at $3.5 billion that are underfunded. Seems that there is a lot less money in the pot than everybody thought. There’s been an ongoing debate among pension plan advisors, actuaries, about what and how to calculate the value of pensions that will be paid in the future. Jeremy Gold is an actuary and economist. We asked him for an explanation of all of this and why does the think that the math all these years has been wrong. He joined us from our bureau in New York, and I asked him how actuaries go about estimating how much money is needed to fund these plans.
Listen to the full interview and read the transcript at NPR.