Governments have defaulted on their obligations. The State of Michigan did, about 1961. One result of that was a new state constitution, that requires the budget be balanced each year – but I don’t know if that requires setting money aside for future pension obligations or not. It’s even happened on a national scale, and even to first-world countries. In the 1920′s, France got into a position where the interest on the national debt exceeded the maximum that could be collected in taxes. (And squeezing the Germans for “war reparations” owed from WWI accomplished nothing except destroying the German economy too, getting Hitler elected, and causing WWII.) Much of this debt was in what Americans would call “savings bonds”, owed by the government to individual Frenchmen. After some years of digging themselves deeper in the hole by borrowing to cover interest payments, the French government issued new francs, at a 10:1 ratio with old francs, and in the process devalued their debts by 90%. That destroyed many individual retirement plans which had been based on those bonds.

AFAIK, that huge default was the last time French politicians united to act courageously or responsibly, and the ones responsible were never elected to anything again.

Doesn’t that difference have a marked effect on how people view the risks associated with unfunded government liabilities vs private ones?