FRONTLINE Investigates America’s Pension Crisis — and Who’s Paying For It
The Pension Gamble
Tuesday, October 23, 2018, at 10 p.m. ET / 9 p.m. CT on PBS & online
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America is in the midst of a pension crisis: Around half of all states haven’t saved nearly enough money to pay for the benefits they’ve promised to government workers — and the total shortage adds up to trillions of dollars.
Who is responsible — and what is at stake for the country’s teachers, police, firefighters and other public employees?
Those questions are at the heart of The Pension Gamble, a new FRONTLINE investigation that comes to PBS on Tuesday, October 23. In the documentary, producers Marcela Gaviria and Nick Verbitsky and correspondent Martin Smith trace how state governments have withheld pension contributions to cover shortfalls and by waging risky bets on Wall Street.
“This is a story about having your retirement, that you thought was secure, go south — and it’s a story that impacts millions of Americans,” says Smith, who with Gaviria previously investigated another element of retirement in America, the 401(k) industry, in 2013’s The Retirement Gamble.
Now, Smith goes inside the volatile fight over pensions playing out in Kentucky, a state whose once-flush pension system for its police, firefighters, teachers and other public workers is now among the worst-funded in the nation.
It’s a fight with broader consequences for public employees everywhere: “What is Kentucky’s problem is New Jersey’s problem, is Illinois’s problem, is Connecticut’s problem, is California’s problem,” Kentucky Governor Matt Bevin (R) tells FRONTLINE. “This is a crisis of epic proportion in the United States of America. And it’s time we wake up and address it.”
As the documentary explores, starting around 2000, a series of Kentucky politicians, reluctant to raise taxes, began to divert pension savings to pay their bills and fund other projects: “The pension was used basically as a piggy bank,” journalist John Cheves tells FRONTLINE, comparing how the state’s pension system has been administered over the past two decades to “a slow-motion car crash.”
The shortfall grew after the 2008 financial crisis — and Kentucky’s public pensions decided that in order to dig out from under, they would invest in some of Wall Street’s more exotic and risky investment vehicles, like hedge funds. Wall Street, The Pension Gamble reports, was more than happy to answer the call.
State pensions have been a major recruiting draw for public employees — who argue they are often underpaid in terms of salary (Kentucky’s public school teachers have seen their wages, when adjusted for inflation, increase by less than half a percentage point in the last two decades), but who are offered financial security via a guaranteed pension later on, in their retirement years.
“When you look at public servants, your teachers, your cops, your firefighters, the pension represents our promise to them, and also an acknowledgement that we might not be able to pay you what you’re worth right now, but we’re going to be there for you on the back-end,” Kentucky State Senator Morgan McGarvey (D) tells FRONTLINE.
Now, as Kentucky’s governor makes moves to stop shorting the pension system — including offering new hires a 401(k)-style system rather than a guaranteed pension plan, and increasing the pension contributions made by existing workers — and makes inflammatory comments about the state’s teachers, some public employees fear that promises made to them will be broken.
“Many of us teachers are working paycheck to paycheck, trying to make ends meet,” says public school teacher Christina Frederick-Trosper. “I have no savings. So, my pension is everything. Without that, I won’t survive.”
Gripping and eye-opening, The Pension Gamble is a must-watch look at a system in crisis, state governments’ and Wall Street’s role, and why finding solutions matters.
“The bill will come due,” columnist David Sirota tells FRONTLINE. “The bill will come due.”
The Pension Gamble premieres Tuesday, October 23, at 10/9c on PBS and online at pbs.org/frontline.
The Pension Gamble is a FRONTLINE production with Rain Media, Inc. The producers are Marcela Gaviria & Nick Verbitsky. The co-producers are Brian Funck & Sara Obeidat. The correspondent is Martin Smith. The writers are Marcela Gaviria & Martin Smith. The executive producer of FRONTLINE is Raney Aronson-Rath.
FRONTLINE, U.S. television’s longest running investigative documentary series, explores the issues of our times through powerful storytelling. FRONTLINE has won every major journalism and broadcasting award, including 91 Emmy Awards and 20 Peabody Awards. Visit pbs.org/frontline and follow us on Twitter, Facebook, Instagram, YouTube, Tumblr and Google+ to learn more. FRONTLINE is produced by WGBH Boston and is broadcast nationwide on PBS. Funding for FRONTLINE is provided through the support of PBS viewers and by the Corporation for Public Broadcasting. Major funding for FRONTLINE is provided by The John D. and Catherine T. MacArthur Foundation and the Ford Foundation. Additional funding is provided by the Abrams Foundation, the Park Foundation, the John and Helen Glessner Family Trust, Wyncote Foundation, and the FRONTLINE Journalism Fund with major support from Jon and Jo Ann Hagler on behalf of the Jon L. Hagler Foundation.
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