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Everyone wants some evil person to blame, so no one will read this comment, but here it goes anyway.
Pension funds are bankrupting municipalities and have been abandoned by business because of declining interest rates. To understand this, you need to understand the basic mechanics of pension funding.
A pension fund sets aside money today to pay future obligations. A key to this is that the money put aside will earn interest just like your savings or retirement account. As interest rates decline, you have to set aside more money to hit your relatively fixed future obligation.
Now look at an chart of interest rates since 1982 — interest rates have been dropping for 30 years. Just the impact of a drop in interest rates from 6% to 3% is huge. Interest rates were over 10% in the late 1980s.
What this means is the cost of a maintaining a solvent pension fund in our steadily declining interest rate environment has been going up and up and up and up.
The law requires that pension funds are appropriately funded, so as interest rates keep dropping, companies and municipalities have to put more money aside to fund the same benefits. Companies respond by freezing the plans (like Boeing). Municipalities just go bankrupt because they don’t have the guts to freeze the plan.
So, yes, some employees abuse the system and some money managers take excessive fees, but that’s peanuts compared to the larger issue of low interest rates.