10 Things Public Plan Acturaries Won’t Tell You

It was supposed to be 13, as inspired by the new Reader’s Digest book, but for my presentation at the New Jersey Taxpayers’ Association Pension Forum at Morris County Library at 7 pm on Thursday, November 1, I could only come up with:

10 Things Public Plan Actuaries Won’t Tell You

If you don’t have Powerpoint you can download the free viewer here  or, if you don’t want to wait that long, here is the pdf file of the slides.

For details come November 1 to the Morris County Library for the NJTA General Membersip meeting.  Suggestions welcome to get to 13.

8 responses to this post.

  1. Posted by Jim on October 16, 2012 at 3:51 pm

    John, you might add that the Standards of Practice for the actuarial profession call for assumptions to be REASONABLE, not PROBABLE, which give actuaries all sorts of room to tell their clients what they want to hear.

    It is easy to understand why elected officials pull all the levers they can to reduce employer contributions: The pension bills don’t get paid until many years after today’s elected officials leave office and no one wants to be the mayor or city councilman who had to cut services or neglect infrastructure because of increased pension contributions.

    It is more interesting why the unions permit the lax actuarial standards. If by reducing investment return assumptions or using the most current mortality tables it becomes necessary to reduce future pay increases, it may be a wealth destroying endeavor of unions to insist on funding based on likely actuarial assumptions instead of relying on the constitutional guarantees of pension benefits that public employees enjoy.

    A major problem tax payers face is that those elected and appointed officials who make the pension deals aren’t responsible for delivering on their promises. Pension underfunding will continue to be a major challenge until some politicians are ready to put their careers on the line to fix these costly problems.

    Reply

    • Posted by Tough Love on October 16, 2012 at 5:21 pm

      Re you last sentence …. no, Pension underfunding will continue to be a major challenge until Politicians cannot accept Union campaign contributions, and Collective Bargaining is outlawed. THIS will lead to benefit levels that are more reasonable in size and therefore cost.

      Reply

      • I respectfully disagree with practically every aspect of that sentence.

        Pension underfunding is no challenge at all when you are able to default on first a part and then eventually all obligations.
        Politicians should not accept ANY campaign contributions or, if the Supreme Court disagrees, impose a 5000% tax on them which is about what they buy on average in taxpayer money.
        Collective bargaining is perfectly reasonable as long as you are bargaining with people you don’t own.
        Defined Benefit plans are the problem. Nobody still will have an interest in revealing their true cost. DC is the way to go where the level of benefits are understandable and not easily manipulated.

        Reply

        • Posted by Tough Love on October 16, 2012 at 5:48 pm

          I don’t really think we are that far apart.

          (a) I call for an end to Collective Bargaining because I don’t believe we have must chance of the Union’s not owning those they bargain with

          (b) ending ALL campaign contributions (not just Union is fine) and better than my suggestion …. Corporations CAN be quite abusive as well.

          (c) While I agree that DB Plans ARE a problem, they can be manageable with much lower benefit levels AND implementing (a) & (b) above.

          Reply

          • Why not be perfect?, Solve the problem?

            “…DC is the way to go where the level of benefits are understandable and not easily manipulated…”.

            ..

          • Posted by Tough Love on October 16, 2012 at 7:29 pm

            I’m not a supporter of Public Sector DB Plans, I just said they could be “manageable” under certain circumstances.

            But yes, what’s manageable today could be undone by tomorrow’s politicians. DC shine when it comes to transparency and stopping abusive practices.

  2. Posted by TREEeditor2 on October 16, 2012 at 4:25 pm

    you left out one of your normal chants: the actuaries are hired not by their professionalism but how much they can justify the solvency claims by the politicians..

    That and what jim brought up above in his post that there is no accountabiltiy to those who created this system today when it blows up tomorrow.

    Reply

  3. […] New Jersey Taxpayers’ Association last night regarding pension reforms needed in New Jersey focusing on the deceptions to which the current system is susceptible.  It lasted an hour and rather than posting the whole thing (which none of us are going to sit […]

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: