Archive for the ‘Public Pensions – General’ Category

Rating State Pension Benefits

This started out as a quickie blog to get a simple point across about the underlying precept of New Jersey Governor Christie’s initiative to reduce public pension benefits, namely that the benefits New Jersey provides are overly generous.  Is that true?

Policypedia has a good compilation of official data from various sources but because there are no set standards among plans there is no easy way to compare benefits among state plans by only using asset and liability numbers.  You have to find the website where each state keeps their actuarial reports, go to the Summary of Benefits section of either the actuarial report or the CAFR, and see how those benefit formulas compare with what New Jersey’s is providing to most of its public employees (from page 44 of the PERS report: about 1.82% of pay times year of service at retirement age 60).

So I did and here are all the links to where the reports are by state and plan.  Actuarial reports all have a section that describes the benefit formula and after a review of a few plans I found….

Continue reading

Pensions Frying in New Jersey Too

‘Kentucky Fried Pensions: A Culture of Cover-up and Corruption‘ by Chris Tobe primarily focuses on the killings nefarious elements in the exotic-investment industry made by selling snake oil to severely underfunded public pension plans desperate to find ways to pay those promised pensions by any means except the obvious one – making contributions.

The focus is on Kentucky and Illinois but with New Jersey moving towards having 38% of their remaining trust assets in alternative investments the lessons of Arrowhawk and Record Currency Management will likely be visited upon us (assuming they haven’t already been and no one with any sense of public duty has found out as yet).

Among the thought-provoking excerpts from the book:

Continue reading

Bashing 401(k)s

401(k) plans, a disaster for retirement security in the private sector, are creeping into public plans with New Jersey likely to announce some ill-thought-out hybrid system later this month to forestall another debt-ratings downgrade.

James W. Russell in Social Insecurity: 401(k)s and the Retirement Crisis lays blame on Milton Friedman, Jose Pinera in Chile, the World Bank, conservative think tanks, and the financial services industry for the demise of the defined benefit system in the private sector and warns that a similar cabal is coming for the public plan system.  That all may be true but his diagnosis of the real situation with public plans, especially in the sub-chapter TARGETING PUBLIC EMPLOYEES AND THEIR PENSIONS, is naively dangerous.  For example….

Continue reading

Hope For Public Pensions

Professor Amy B. Monahan of the University of Minnesota authored a valuable well-documented research paper on the Public Pension crisis that diagnosed the problem amazingly well for an academic before slipping up when it came to the obvious solution – and there is one though someone not in the political trenches might be excused for missing it.

Continue reading

Employees Paying For Their Own Pensions In New Jersey?

Alicia H. Munnell, director of the Center for Retirement Research at Boston College, in a WSJ blog believes that benefit cuts for New Jersey retirees should not be considered  in part because “New Jersey benefits for current employees are now significantly below the national average and employees pay most of the costs.”

This statement strikes one as odd since the latest valuation reports show employee contributions at $1.93 billion while government contributions are at $2.98 billion but Ms. Munnell is obviously referring to the annual accrual of benefits known as the Normal Cost which, according to the July 1, 2013 actuarial reports, does show employee contributions covering 65% of that Normal Cost for the five largest plans ($1,874,252,148 out of $2,897,259,254 in this spreadsheet).  But there is a reason for that.

Continue reading

Complaining About Public Plan Actuaries

“This session is not being recorded but you may be quoted in John Bury’s blog”

Lance Weiss kicking off Session 704 – Public Employee Retirement Systems Workshop – today at the  Enrolled Actuaries meeting at which this interesting tidbit came out.


Continue reading

Public Plan Actuaries as the Disease

“The Society [of Actuaries] needs to stop treating its members as some disease that the public has to be protected from.”

Paul Angelo, Public Plan Actuary one hour ago at a session on the Public Pension Plans Blue Ribbon Panel at the Enrolled Actuaries meeting to applause


Continue reading


The 2014 Enrolled Actuaries meeting kicked off with a review of ASOPs and I had a question about ASOP 27 as it applies to public plans.


Continue reading

Walter Mead Nails 3 of 4 Conspirators

Fox Business is focusing on the public pension crisis and their latest video has Bard Professor Walter Mead describing the conspiracy among government officials, politicians and union leaders that got us here:



Yet conspicuous by their lack of mention….

Continue reading

SOA Panel States the Obvious – Though Not to Everyone

The New York Times reported today that a “blue-ribbon panel of the Society of Actuaries — the entity responsible for education, testing and licensing in the profession — says that more precise, meaningful information about the health of all public pension funds would give citizens the facts they need to make informed decisions.”

Basically the report made four very sensible recommendations that most citizens would be amazed had to even be recommended.  Anyone without ulterior motives should have no problem agreeing with three of them:

  • a plan’s funding goal should always be 100 percent
  • disclosure of a “standardized plan contribution” that would be calculated by all plans using the same discount rate and funding methodology
  • not using funding instruments that delay cash contributions (i.e. Pension Obligation Bonds)

Then there is the tricky, though no less valid, recommendation:

Continue reading


Get every new post delivered to your Inbox.

Join 217 other followers