Now governments need to put a lot of money into the pension funds or dilute the promises or, at least for new hires, move away from old-style pensions to the 401(k)-style plans common in the private sector, or all three.
European policy makers are considering a host of proposals to eliminate implicit government guarantees, including a new resolution regime, turning some liabilities into bail-in debt that will automatically take losses, depositor-preference regimes that would subordinate unsecured bondholders, and U.K.-style plans to ring-fence certain activities.