Illinois is in one of the worst situations of any state. A "slight" cut on the top pensioners only worked for Detroit because they also defaulted on their bonds. Illinois has no hope of making "slight" cuts to only a few people within their current plan.I suspect that it may either be a Detroit type thing, where the top pensioners get cut slightly. Or the pensions get transferred to the
Or I can even see where the State(s) turnover the pensions to the PBGC.
Or even the States take a low-interest loan out from the feds to pay the pension obligations.
I just really do not see the majority of pensions getting cut. Most Cities are behind the curve on funding their pensions.
There would be a number of states that would seriously object to the Feds taking over any ownership of the underfunding of any state or municipal pension plan. As mentioned earlier, the PBGC is "insurance" that is funded by other private pension plans. Your options imply all states would have to enter into the plan and pay premiums for their brethren who would immediately be in default. Ain't gonna happen.
Many public pensions are well behind the curve. I personally can't see it ending well. Who gets cut and by how much? How badly do taxpayers get shafted for years of political mismanagement? These are all unknowns but we see what happened to Detroit when they tried to make it all up on the backs of the taxpayers.