3 ms·

The mere fact that it is legal for any pension to be underfunded is absolutely beyond me. But I can't say that I blame any government for doing such, most of th

by viggity 17y ago

The mere fact that it is legal for any pension to be underfunded is absolutely beyond me. But I can't say that I blame any government for doing such, most of the time they're essentially being extorted by public workers unions for pay and benefits that far exceed the market rate. What the heck is wrong with a traditional 401k contributions like the rest of America gets. I know a guy who worked as a janitor, mopping floors at a state building for 10 years and because of this I'm going to end up paying him 25 to 30 grand a year, every year after he turns 65? Its outrageous that the state tax payers are being fleeced. Eventually municipalities and states are going to go bankrupt and the pensioners are going to get pennies on the dollar.

bd_at_rivenhill 17y ago
The determination of whether a pension is underfunded is based on actuarial studies that, by necessity, must make assumptions about both the longevity of retirees (and survivors) and the return on invested funds. A fund which is fully funded under a 6% return assumption which then takes a 20% hit to its assets due to a sudden market downturn then becomes underfunded, and the sponsoring entity is required to make catch-up contributions. There is no difference between the public and private sectors in this regard. However, as stated by the author, the pension beneficiaries of a public system have much more powerful tools to force their interests to come first in the event of underfunding than do private pension beneficiaries. There have also been cases of manipulation of the actuarial numbers, including a case in New York or New Jersey (can't remember which) where the actuary doing the pension study was also a paid consultant for the public sector unions. Not surprisingly, he concluded that significant benefit increases could be managed at the current funding level.

by viggity 17y ago

bd_at_rivenhill 17y ago

The determination of whether a pension is underfunded is based on actuarial studies that, by necessity, must make assumptions about both the longevity of retirees (and survivors) and the return on invested funds. A fund which is fully funded under a 6% return assumption which then takes a 20% hit to its assets due to a sudden market downturn then becomes underfunded, and the sponsoring entity is required to make catch-up contributions. There is no difference between the public and private sectors in this regard. However, as stated by the author, the pension beneficiaries of a public system have much more powerful tools to force their interests to come first in the event of underfunding than do private pension beneficiaries. There have also been cases of manipulation of the actuarial numbers, including a case in New York or New Jersey (can't remember which) where the actuary doing the pension study was also a paid consultant for the public sector unions. Not surprisingly, he concluded that significant benefit increases could be managed at the current funding level.