Private companies also have contracts with pension funds but when they can no longer afford them they are able to declare bankruptcy. When public pension funds grow beyond the ability of the taxpayers to pay for them at reasonable tax rates, then cities and states should also be able to declare bankruptcy.
And then the PBGC (meaning us taxpayers) picks up the tab.
The pensioners don't just lose their pensions.
Defined benefit plans in the private sector(DBs) are typically insured thru the PBGC and bankruptcy does not protect the employer from renegging on its pension obligations. Typically those pensioners who are affected are considered those who are "highly compensated", I think the figure starts around $49,000 per year in pension.......
My company did the very same thing two years ago, declared bankruptcy and attempted to divest itself from its pension obligations. Fortunately it didn't work..........
If i’m not mistaken, didn’t the city of Vallejo Ca declare bandruptcy.