You Can Only Rely on Our Numbers

New Jersey went borrowing again on May 23 and they had to mention the skipped pension payments they were proposing to make:

The proposed reduction in contributions described above could have the effect of (1) delaying the phase-in of the State’s full actuarially required contribution, (2) increasing the amount of such contribution, (3) increasing the size of the UAAL and (4) decreasing the percentage of the Funded Ratio of the Pension Plans once the phase-in is completed. See “FUNDING PENSION PLANS – Impact of Pension Reforms and the State’s Funding Actions on Pension Plans.” Assuming contributions equivalent to the employer normal cost in Fiscal Years 2014 and 2015 and resumption of the seven-year phase-in in Fiscal Year 2016 at four-sevenths (ending with a full actuarially required contribution in Fiscal Year 2019), a preliminary analysis projects a full actuarially required contribution in Fiscal Year 2019 of approximately $4.8 billion, a UAAL in Fiscal Year 2019 of approximately $46 billion and a Funded Ratio of the Pension Plans in Fiscal Year 2019 of 48.24%. Based on this preliminary analysis and absent any other action by the State, the State could be required to make higher than anticipated contributions in subsequent years. As the State has previously noted, future increased contributions in future Fiscal Years, depending on their magnitude, will likely create a significant burden on all aspects of the State’s finances.

Wow! By 2019 there could be Unfunded Actuarial Accrued Liabilities of $46 billion.  But what about all those people out there saying those UAALs are much higher even before this sudden contribution holiday and the possible return of COLAs?  The Treasury people thought of that and the very next paragraph:

The State anticipates that in response to actions being taken pursuant to Executive Order 156 and the information provided in the Treasurer’s Statement, members of the State Legislature, other elected officials and representatives of organizations and individuals affected by the actions ordered or proposed, including representatives of individuals covered by the pension funds, may issue statements or reports, post information on websites or otherwise make public information that characterize the ordered and proposed actions and the effect thereof on the State, its programs and its financial condition. Such statements, reports and information are not part of this Appendix I or the Official Statement to which this Appendix I is appended and should not be relied upon by investors or other market participants.

Of course, do not rely on those people who have a vested interest in receiving a pension or who do not have a vested interest in getting contributions as low as possible.  Rely on us and see where that gets you.

 

 

5 responses to this post.

  1. Posted by Tough Love on June 23, 2014 at 11:17 am

    Another WOW …. Projected 2019 “official” basis UAAL of 48.24%, and that’s IF they get back on the scheduled 7-year grade-in.

    And under Moody’s methodology (discounting Plan liabilities at about 5.5% instead of the Plans’ official 7.9% assumption) the “official” 48.24% is just about 35%.

    Anyone who thinks paygo is more than 5 years away (unless super-major Plan reductions for all CURRENT workers occurs almost immediately) is delusional … and even doing so would only push it back a few years.

    Taxpayers ….. STOP the madness, the decades-long financial “mugging” that has been perpetrated upon you by the insatiably greedy Public Sector Unions/workers and DEMAND that these DB pensions be frozen for all CURRENT workers …. ZERO future growth due to increased salary or service.

    For FUTURE service, the current DB pension should be replaced with no more than what YOU typically get, a 3% employer contribution into your 401k DC Plan and, IF YOU’RE LUCKY, an annual $300 contribution into an HSA (Health Savings account) to help YOU (NOT your employer) DIRECTLY pay for your OWN retiree healthcare premiums and expenses.

    Greed HAS consequences, and it’s WAY past time for a change !

    Reply

  2. Posted by Anonymous on June 23, 2014 at 1:32 pm

    Not paying your taxes has it consequences as well but dont worry, I believe they have internet access in prison. TL can continue her line of BS.

    Reply

    • Posted by Tough Love on June 23, 2014 at 2:18 pm

      Not paying taxes won’t become a problem, as any tax increases will be very modest.

      Budgets will be met as our elected officials realize that they HAVE NO OPTIONS other than materially reducing the outsized pension & benefits of CURRENT Public Sector workers.

      Greed HAS consequences.

      Reply

  3. Posted by Anonymous on June 23, 2014 at 2:30 pm

    you need to start reading some books on hoarding. life was simpler and better when people like werent trying to hoard money and things

    Reply

  4. Posted by Tough Love on June 23, 2014 at 10:24 pm

    THIS article sums up the Public Sector pension fiasco situation EVERYWHERE perfectly.

    Just substitute YOUR City/State for Illinois:

    http://www.chicagotribune.com/news/opinion/letters/chi-letter-taxpayers-are-the-real-victims-of-pension-underfunding-20140623,0,5874616.story

    Reply

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