@techreport{NBERw14343,
 title = "The Intergenerational Transfer of Public Pension Promises",
 author = "Robert Novy-Marx and Joshua D. Rauh",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "14343",
 year = "2008",
 month = "September",
 URL = "http://www.nber.org/papers/w14343",
 abstract = {The value of pension promises already made by US state governments will grow to approximately $7.9 trillion in 15 years.  We study investment strategies of state pension plans and estimate the distribution of future funding outcomes.  We conservatively predict a 50% chance of aggregate underfunding greater than $750 billion and a 25% chance of at least $1.75 trillion (in 2005 dollars).  Adjusting for risk, the true intergenerational transfer is substantially larger.  Insuring both taxpayers against funding deficits and plan participants against benefit reductions would cost almost $2 trillion today, even though governments portray state pensions as almost fully funded.},
}