Pensions get abused because they can be. (I'll limit this to public pensions) When a municipality issues a bond, that bond has an indenture which is a contract

Pensions get abused because they can be. (I'll limit this to public pensions) When a municipality issues a bond, that bond has an indenture which is a contract. It has a very specific set of rules about what the municipality can and cannot do (covenants) and a very specific schedule for when and how the money must be paid back. Try skipping an interest payment and all the sudden you instantly find that there are serious consequences, like you find yourself in court, or threatened with involuntary bankruptcy, and your credit rating goes down, etc. When a person obtains a mortgage, they too sign a contract specifying things they must do (eg get insurance) and a schedule for repaying principal and interest. Try skipping a month or two of payments and the bank starts calling, it affects your credit, and maybe you lose your house one day if you keep not paying. But pensions have nothing like this...it's almost the reverse set of incentives. There's virtually no enforcement of prudent management. The Chicago teacher's pension fund skipped making contributions for a decade in what they euphemistically called "pension holidays". Instead, the money got diverted mostly to higher salaries. The people who ran the city were actually rewarded for this malfeasance. And that's in addition to routinely underestimating critically important assumptions such as healthcare costs, lifespan, investment returns, and interest rates, which are hard enough as it is. The problems take multiple election cycles to manifest, and it creates a massive moral hazard. You couldn't design a more toxic form of IOU if you tried...I've long argued that public pensions should be illegal.