All Right Class, It’s Time For Your Pension Lesson

At the Show-Me Institute we have written a number of times about Khan Academy, the online resource that seeks to provide a “free, world-class education for anyone, anywhere.” We have discussed how teachers are using Khan Academy to “flip the classroom.” Instead of having students do homework at home and lecturing at school, they have students watch Khan Academy videos at home and use class time to practice the skills they are learning.

So, I’m going to take a page from the ‘ol flipped-classroom routine and assign you a homework assignment – pensions. Sal Khan has created two videos that offer a great explanation of how defined-benefit pension plans work. In this first video, he shows how these plans can become dramatically underfunded.

In the second video, he uses the Illinois boondoggle of a pension system to provide a real world example. One of the amazing things he shows is that pension payments will soon surpass K-12 education funding.

Watch these videos to learn more about the pitfalls of defined-benefit pension systems. Then, connect with us in the comments section, on Twitter, or on Facebook to discuss more.