Public pensions are not exactly a burning issue for millennials. In their minds, they won’t be retiring for decades, and pensions won’t affect their lives anytime soon. That line of thinking couldn’t be further from the truth. There’s currently a public pension crisis that doesn’t just affect retired government employees, but also young people in the workforce — both in terms of their future retirement plans and current salaries.

Millennials, tune in. Most local and state retirement plans use a defined benefit structure, meaning that employees are guaranteed a certain monthly amount upon retirement. Whenever governments are short on the funding promised to retirees, they have to make up for their shortfall, either with supplemental one-time catch-up payments or increased annual contributions.

Public sector pension benefits are frequently guaranteed by state constitutions, which means governments are bound by law to pay what was promised. Currently, governments across the country owe $1.6 trillion more in pension benefits than they have saved. This debt translates into public pensions being only 73% funded.

Governments with underfunded pensions need to come up with the money somehow, and the most obvious way is to raise taxes. What this means for millennials, who are already the largest generational group in the workforce, is that more of their tax dollars could be diverted to paying down public pension debt instead of paying for public services.

All the funds that should have otherwise gone toward schools, roads and state parks, could be redirected to cover underfunded pensions for employees who stopped working 10 or 20 years ago. So, pension debt will affect all millennials, even those outside public sector jobs — because everyone’s a taxpayer.

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