It’s just maff. The looming government pension catastrophe can’t be avoided by faking the assumptions used to value pension assets. Almost every pension plan in America uses at least a 7% annual return assumption in their calculations – and this still reveals unfunded liabilities in the trillions. Well guess what, the 7% assumption is a fucking joke.
Stocks are more overvalued than any time in history. They are priced to deliver 10 year returns of ZERO!!! Ten year bonds are yielding 1.59%. Do you think there will be much appreciation in bonds? Not a chance. If pension managers weren’t lying hacks, they would reduce their assumption to 3% or less. The impact would be to show every pension plan in America as defunct and bankrupt – because they are. I hope anyone depending upon a government pension understands this fact.
Submitted by Walter Russell Mead via The American Interest,
America’s slow-motion public pension train-wreck (by some estimates, the shortfall currently exceeds $3 trillion) has been kept in motion for years by deeply dishonest accounting practices employed by state and local governments, which presume unrealistically that pension funds can consistently earn white-hot annual returns approaching eight percent. So it’s disappointing, but not particularly surprising, that the actuarial establishment moved to suppress a report pointing this out.
Pensions and Investments reports:
The American Academy of Actuaries and the Society of Actuaries Monday abruptly disbanded its longtime joint Pension Finance Task Force, objecting to a task force paper challenging the standard actuarial practice of valuing public pension plan liabilities.
“This paper (is) being censored by the AAA” and SOA, said Edward Bartholomew, who was a member of the former task force, in an interview. “They didn’t want it to get out.”
Others who were members of the task force also said in interviews the two actuarial groups are trying to suppress publication of the paper.
There are powerful interests that don’t want public pensions to be governed by the same kinds of accounting principles used in the private sector because… well, because if they were, public pensions would go from seriously underfunded to catastrophically underfunded.
Union officials and state legislators (in both parties) seem to believe that it makes more sense to allow public pension funds to play “let’s pretend” with public money. To be sure, the sudden imposition of a tougher standards would cripple business as usual in many state and local governments, so there can and should be some reasonable accommodations made to allow the adjustment to take place in a less disruptive fashion. Governing by catastrophe is almost never a good idea, and a series of small and incremental changes is usually (though not always) a better way to manage public affairs.
In the long run, shifting to a more portable system of public pensions—defined contribution, rather than defined-benefit—wouldn’t just help save states and municipalities from fiscal ruin. It would also do much to improve the performance of the civil service. The current system creates a jobs-for-life mentality in public employment because workers need to stay at their positions for decades to collect the full value of their pensions. Somebody who was a good teacher at 30 but wants to leave and should leave at 40 is currently trapped. Also, one of the reasons the unions fight quality evaluations so fiercely is that the loss of job and pension is so much more draconian than simply losing a job.
The report from dissident actuaries might have helped push state and local pension systems down a more sustainable path. And the conduct of American actuarial leaders—disbanding a reputable task force that had prepared a report that the bureaucracies didn’t like, and then hinting at legal action if the report is published—is irresponsible at best and corrupt at worst. Is it any wonder that Americans are fed up with experts and the institutions they manage?
I don’t have a pension or health insurance. I do have cash ,silver and some gold buried under my mom’s house. All I got to worry about is the house burning down.
My hope …absent from the body , present with the LORD…If Christ isn’t who He said he was then I will never know but if he is God I will be OK .So will mom and little bb.
Mat_4:7 Iesus saide vnto him, It is written againe, Thou shalt not tempt the Lord thy God.
Mat 5:45 That ye may be the children of your father that is in heauen: for he maketh his sunne to arise on the euill, and the good, and sendeth raine on the iust, and vniust.
-Geneva
God seems to expect us to do for ourselves those things which we can do for ourselves and seek his aid and for those things we cannot do by ourselves but still must if we are to remain on his path.
Fuck you, walter russel mead. Scum like you is why nothing ever gets done. You went straight from factual argument to neocon wish list. Defined contribution (401k) is and always has been, a sap to wall street. Defined benefit only stopped making sense when early retirement started getting pushed, and the promises became excessive. The real answer? Work till 65. Pay off your house. Small pension, augmented by savings and social security. Ban government unions. Re-instate glass-steagall so banks have to pay for capital. End fed counterfeiting. Free money has destroyed the system, and it was a good system.
” Pay off your house. Small pension, augmented by savings and social security.”
Fuck social security! The govt has no business taking money away from anyone and redistributing it to those too lazy to work.
Besides, if you end the fed, which is a minimum standard to obtain the future you envision even if by baby steps, the social security ponzi scheme would never pencil out and fall by the wayside as it should.
star, if you take the time to follow “ending the fed” to it’s logical conclusion you’ll find that 90% or more of what ail us will be “fixed” organically with no further effort. It won’t be pretty or even humane but it will fix what ails us. Sound money controlled by the people will mean inflation on the order of 1% or less per year. THe only reason the fed exists at all is to transfer the wealth of our citizens and wealth of our nation to the owners of that private, mostly foreign owned bank. They serve no other beneficial purpose the to people or the nation.
I hope baby steps turn out to be the answer because anything less than ending the fed is simply pissing into the wind. No viable candidates even allude to ending the evils of the fed.
IS….you are correct in a theoretical sense, but we live in a system that is what it is and we have to adapt to that system. Which is the way of life star suggests.
QE, ZIRP, NIRP is the real killer for the middle class and poor (that worked to achieve). And the registered Dem’s don’t get it.
Kokoda, how much more adapting can the citizens do? How much more adapting can you do? For fuck sake it’s time to END that system of planned theft! What they do is no different than you setting up a new lase printer and printing your own money. Legal for them, illegal for you!
Henry Ford was 100% correct when he said:
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
There is a giant beast picking our pockets, stealing our life, liberty and happiness 24/7/365 and you want to adapt to to it even more? The real killer is the fucking fed. QE, NIRP, ZIRP and never ending inflation are THEIR weapons of choice! How is this not obvious?
With the fed or without the fed this country and the entire world is about to experience a financial calamity of unprecedented proportions. Considering that they fostered 99% of it I say that we suffer the calamity and the rebuilding WITHOUT the fuckers! To allow them to survive in ANY form is insanity! They fucking OWN you! If the people understood this dems might not even exist. Republicans either! A system of sound money ends the free shit and 24/7 war machine which is their very raison de vivre. Sound money requires living within ones means. Housing prices, educations costs, food, energy prices and just about everything else levels off and stabilizes for decades if not generations with sound money.
Good to see that someone reads the linked articles.
star….Like
Here is how this stuff gets so out of whack. A good friend of mine was the director of public services for one of the larger cities down here. His pay doubled in less than ten years. He retired at 56 with basically 80% of full pay, pension of about 125k a year. His affirmative action replacement got a boost, hired at 180k. Within three months, it was clear the job was too big for him. The solution wasn’t to fire him and replace him with a competent individual, it was to hire my friend back as a consultant at the new pay rate of 180k on a three year contract. So now the job that cost the city less than 80 grand a year during Bush’s second term, now costs the city $485,000 a year. And that’s before healthcare, take home cars (they both have them, gassed up and waxed), and any other goodies. (125k pension, 180k consultant, 180k aborigine). WTF?
And jim, you are absolutely correct. What can’t be paid, won’t be paid. Remember what’s holding this entire disgrace up. ZIRP inflating real estate prices. When banks have to pay for money, and can’t afford to write off loans, or bundle them off to pension funds, real estate will drop quite a bit. The beauty of inflated prices has been inflated fees, taxes and insurance. Bad days ahead for the FIRE industries.
You mean responsible government appointees and servants to the people have been over stating and spewing out right lies about something else like pensions for government employees SURPRISE ! All I can say is tuff shit , me a lowly electrical mechanic and my wife a high school grad with accounting experience , both of us with a modest education and over 30 years of experience did all we could for out kids education and our retirement and we stood helpless and watched every economic and financial move or decision our governments , local state and federal made and said holy shit what band of fucking idiots thought this one up ! As we watched the actual buying power of our savings and investments evaporate . All We can say is don’t look at us and fuck off if you do we are investing in lead and brass and long term storage food because this fucking ship is sinking fast . The fun part will be the look on people like Pelosi Obama Reed and a host of others faces when it all goes to shit and they are still attempting to arrange the deck chairs . Sadly most Beltway bandits in DC see nothing wrong everything is on track LMAO
3 of us were laid off/fired on Fri 8/5. I was there 7 yrs, the 2 other guys over 20. I’m 50 and they are older than me. We were told its a cost cutting measure and payroll decision. Bullshit!!
I found out from the office paper pusher that we were replaced with low skill/wage labor. My replacement is from Honduras, no teeth, license or citizenship, just a work visa. How the fuck do we start over at 50+? How the fuck do we not go postal being replaced by border jumpers?
My wife gets it but how do I explain this to my teenage girls?
It’s Sunday morning and I’m already into my 2nd 30 pack. I know this is not a cure, but for this weekend it sure the hell feels like it.
Bring on Watkins Glen at 3pm.
My very sincere condolences. Your family and family life is at a crossroads. Accept the fucking that life has just thrown at you and take positive action and don’t give up, else you won’t have a family. It is a common event as a result of Dem and Rep political class purposely offshoring jobs (to allow greater profits for corporations) and expanding the H-1b program with the lie that American workers do not have the skills.
You need a skill that will be required by the public.
Best to you.
Goofyfoot. Feeling ya. At 50, you still have another run on you. Make it count. Big change coming, very soon. Keep the faith.
Pensions, both public and private but especially public, cannot be repaid with money of equal value to that which was put in or promised, or even with money of equal value to today’s money as well.
The same as with all our other debt.
BB what was your mom’s address again..
The Federal Reserve, and the people behind it, are the root of the problem. I am trying to educate people, but the brainwashing runs deep.
The local cops and firefighters have gotten so desperate they’ve convinced the city council to add a measure to the ballot in Nov that increases sales tax by 1% to fight the “giant crime wave”. They tried it in the primary, taking 2/3rds to pass and it just barely failed because their scare tactics were effective. So now they’re putting out as a different type of measure that only takes a majority, but the use of the money is much looser; i.e. doesn’t have to be used to “improve” police/fire coverage.
They’re saying it’s to increase public safety but I’ll betcha most will be used to float the goal-plated pensions of these fucks. Imagine a police chief earning over $300k in income and benefits in a town of less than 80,000 population!
Thing is, I hear several similar-sized communities are trying the same shit.
Westcoaster swings and connects.
As an aside, in many small towns, guess who the highest paid person is?
That would be the minister of the largest church. Back in 1985, I worked in a small East Texas town of a few thousand folks. The Baptist minister was on $180k and drove a Mercedes. In 1985.
Religion pays as well as any other criminal, er, business activity.
Boat Guy…I hope that when the big reset begins that the deck chairs are kicked out from under those criminals in CONgress and the rope snaps their chicken shit necks .