How to Solve the Pension Challenge

Diana Lind of Next City poses five ways big cities can alleviate some of their pension funding problems.

2 minute read

November 16, 2014, 11:00 AM PST

By Maayan Dembo @DJ_Mayjahn


At a recent Penn Institute for Urban Research event, "Urban Fiscal Stability and Public Pensions: Sustainability Going Forward," pension funding experts discussed some of the issues facing cities as more Baby Boomers begin retiring. According to Diana Lind of Next City, "The pension problem extends far beyond Detroit, to the United States’ largest cities: New York, Los Angeles and Philadelphia all have unfunded liabilities, while Chicago’s pensions are just 50 percent funded. Ballooning pension costs are trouble for city governments, retirees and, perhaps most of all, taxpayers, as infrastructure, schools and other needs are simply put off while the city pays for pensions, benefits and interest."

Among the five ideas Lind notes, one is taken from Stanford professor Joshua Rauh. At the event, Rauh suggested that "payouts should be linked to how well a retirement fund delivers. He noted that the S&P 500 went up by 75 percent between 2009 and 2013. Yet after studying 10 cities, he found that even though pensions are heavily invested in stocks, six of the 10 cities saw their unfunded liabilities fall by just an average of 16 percent; meanwhile in four cities, including New York and Philadelphia, these liabilities actually increased. This anecdote demonstrates the magnitude of the pension problem: Liabilities can grow faster than cancer and can’t easily be put into remission."

Other ideas are rooted in electing politicians to address the pension problem, suing actuaries for faulty analysis of a city's liabilities (as Detroit has down), constantly consulting with authoritative experts, and creating a "shared gain" pay-in approach.

Friday, November 14, 2014 in Next City

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

June 25, 2025 - Diana Ionescu

Person wearing mask walking through temporary outdoor dining setup lined with bistro lights at dusk in New York City.

Restaurant Patios Were a Pandemic Win — Why Were They so Hard to Keep?

Social distancing requirements and changes in travel patterns prompted cities to pilot new uses for street and sidewalk space. Then it got complicated.

June 19, 2025 - Diana Ionescu

Map of Western U.S. indicating public lands that would be for sale under a Senate plan in yellow and green.

Map: Where Senate Republicans Want to Sell Your Public Lands

For public land advocates, the Senate Republicans’ proposal to sell millions of acres of public land in the West is “the biggest fight of their careers.”

June 19, 2025 - Outdoor Life

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1 - Honolulu Civil Beat

White and purple sign for Slow Street in San Francisco, California with people crossing crosswalk.

San Francisco Suspends Traffic Calming Amidst Record Deaths

Citing “a challenging fiscal landscape,” the city will cease the program on the heels of 42 traffic deaths, including 24 pedestrians.

July 1 - KQED

Tents inhabited by unhoused people lined up on sidewalk in Los Angeles, California in front of industrial building.

California Homeless Arrests, Citations Spike After Ruling

An investigation reveals that anti-homeless actions increased up to 500% after Grants Pass v. Johnson — even in cities claiming no policy change.

July 1 - Times of San Diego

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.