Ebola Lesson for Pension Actuaries

Politicians do some stupid things since their expertise is generally in propaganda and not in areas like public health or public pensions and their everyman ignorance can have disastrous consequences unless real experts assert themselves.

This week we saw New Jersey Governor Chris Christie embarrassing himself on the Ebola quarantine and being criticized by:

We also saw New Jersey Senate President Stephen Sweeney making a nonsensical proposal to disguise the situation of New Jersey’s woefully funded pension plans and nobody but the usual commenters rebuked him.  This is just the latest in a series of idiotic reforms and manipulations that have doomed the state plans:

All begotten by an underlying ignorance that real independent experts kept silent about.

5 responses to this post.

  1. Posted by Tough Love on October 29, 2014 at 2:01 pm

    Nice listing, but ..”Taking away contractually mandated cost-of-living adjustments” certainly does NOT belong on a list entitled ..”idiotic reforms and manipulations that have doomed the state plans:”

    As that was the ONLY financially materially change that NJ implemented….. and a Court reversal of the COLA-suspension will only hasten the demise of NJ’s pension Plans.

    Reply

  2. So to be clear, the pensions and benefits will be paid in full through the next 10-20 years or they will not be paid in full with Sweeney gearing up to run for governor? or is it anyone’s guess?

    Reply

    • Posted by Tough Love on October 30, 2014 at 12:38 pm

      What seems clear (short of miraculously high investment returns … such as 25% for 5+ years in a row) is that we will hit pay-go (zero Plan assets other than employee contributions subject to return) in less than 5 years.

      I call that .. when the Sh** hits the fan …. because at that point (and likely well before we actually arrive there) our elected officials will only have 3 choices, either reduce the pension payouts, raise taxes by $5+ Billion, or generate a large share of that $5 Billion (needed to continue making the pension payments) via VERY material reductions in retiree healthcare subsidies for all CURRENT retirees.

      Reply

  3. Posted by George on October 30, 2014 at 2:54 pm

    One way a government can raise revenues, charging what the market can bare for things like parking.

    Need a Parking Spot? Better Prepare Your Bid

    http://www.realbusiness.com/2014/10/here-to-there/need-a-parking-spot-better-prepare-your-bid/?utm_source=taboola&utm_medium=referral&sr_source=lift_taboola&utm_content=bloomberg

    Why not dump the hov lanes and use the toll rate to force people onto busses during rush hour. The state of NJ can definately raise revenues. Marijuana sales could be a state monopoly, heroin too. How about applying sales tax to food and medicine. There’s meat on those bones.

    Reply

    • Posted by Tough Love on October 30, 2014 at 3:19 pm

      Considering how GROSSLY EXCESSIVE NJ’s Public Sector pensions and benefits are (ROUTINELY 3x-4x greater in value at retirement than the employer-provided retirement packages afforded comparable Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service) it is FAR FAR more reasonable, appropriate, and just to NOT raise taxes and/or fees (as you are clearly suggestion), but instead to eliminate the excessive share of those pension & benefit promises for the future service of all CURRENT Public Sector workers.

      Reply

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