Second Financial Economics Paper Out

It’s getting ugly……

8/1/16: Memo on the “Future of the Joint Academy/SOA Pension Finance Task Force”

As a work product of the joint PFTF, the paper, Financial Economics Principles Applied to Public Pension Plans, was–like the predecessor paper 10 years ago–intended to be published by the Academy and the SOA as a jointly owned and copyrighted paper. It appears this is no longer feasible, and neither the SOA nor the Academy will be publishing the paper or endorsing it. Because the paper was the work of the joint Task Force, we do not think it would be appropriate for members of the Task Force, as individuals, to take the existing paper and simply publish it somewhere else.


 8/3/16: Pensions & Investments:
Actuarial leaders disband task force, object to paper on public plan liabilities
8/9/16: Letter to members regarding the joint Academy/Society of Actuaries Pension Finance Task Force:

The paper mentioned in the op-ed was subject to the same robust policy and editorial review process we use with all of the Academy’s publications. A working draft was submitted by the task force for the initial round of review. None of our reviewers thought it was ready for prime time. Setting substance aside, it was poorly written, poorly organized, and difficult for nonspecialists to read. The tone was, in many places, more appropriate for an economic manifesto than an objective policy analysis. Upon receiving the first round of peer review comments, several members of the task force rejected the process and left the table. That made it impossible for the task force to bring the report up to the Academy’s standards.

8/25/16: Wall Street Journal:

Covering Up the Pension Crisis – States and actuaries are trying to stifle debate about the growing shortfall in fund assets.

8/31/16: Letter to members:

Working under the auspices of both our organization and the American Academy of Actuaries, we were unable to reach an agreement with the authors on a version acceptable to all parties through our standard editing process. Nevertheless, on Thursday, Aug. 25, before the publication of the Wall Street Journal opinion piece, we informed the authors of the paper of our plans to publish the paper representing their views in the SOA’s Pension Forum publication. The publication is anticipated by the end of October and will be accompanied by discussant debate from a range of perspectives. In the interim, the SOA has agreed to the authors’ request to allow them more time to edit the paper. We expect to post an updated draft on the SOA website the week of Sept. 5.

9/7/16: November 2015 draft released.

9/11/16: Jeremy Gold’s response:

On 9/7 after delivering an ultimatum to the authors of Financial Economics Principles Applied to Public Pension Plans, the SOA published a November 2015 version of our paper. They ignored our rights and affixed a copyright statement favoring the AAA and the SOA.

Importantly, we had offered the SOA a better version of the paper dated August 31, 2016. We had also offered to recruit discussants and add authors’ responses to the discussions. This approach, which can be seen on the full version of Reinventing which can be found on the SOA website (39 page version), creates a superior product to the paper alone.

The August paper is available here:

It is still a working paper and we may make some further edits. We expect to add intelligent discussions and responses.



20 responses to this post.

  1. Posted by skip3house on September 12, 2016 at 1:35 pm

    …’ getting ugly….’ Truth always is after years of cover ups.


  2. Posted by Anonymous on September 12, 2016 at 2:49 pm

    I’ve heard the argument here that why should future taxpayers, presumably those that didn’t benefit from the services, pay for these benefits. IF this position has merit here then there’s no end in sight using this mentality.

    Why should current taxpayers pay to clean up toxic dump sites that private individuals/corporations benefited from in prior years?

    Why should current taxpayers pay for military pensions from wars that occurred before they were born?

    Why should current taxpayers, without children currently in k-12 schools, pay school tax?

    Why, why, why?

    One reason might be because generation whine doesn’t want to pay for it but they want a free college education!


    • Posted by dentss dunnigan on September 12, 2016 at 3:28 pm

      You are now trying to establish an unselfish society where they trade extortion for extortion. Your system is a legal civil war, where men gang up on each other trying to gain the moral value of altruism.


      • Posted by Anonymous on September 12, 2016 at 3:56 pm

        Hmm and I thought I was describing the history of our Country but your perspective puts an interesting twist on things….


    • Posted by bpaterson on September 12, 2016 at 7:50 pm

      one more: why to those who use the most services pay the least.


      • Posted by skip3house on September 12, 2016 at 8:52 pm

        Would seem to be a requirement of not being wealthy, but being a law abiding citizen supporting loyally the system that makes wealth possible?


  3. Posted by George on September 12, 2016 at 9:10 pm

    This paper is hard to read. I do not see how it is a big deal? How will it affect anything?

    My joke would be you should write a report on past reports that had an effect one way or another. It would be a very short report, and would not have any effect one way or another.

    What no cut and past?

    pg 8. Inter generational equity, IGE.

    Is IGE required? Is it desirable?

    “A police officer’s total compensation should be paid by those he or she protects.”

    Why? What about poor people, how can they pay for police? Should South Korean’s pay the pensions of the American ‘trip wire’ forces stationed in S Korea? I could go on, but I do not think that the police example given is an obvious example. Community policing uses federal money to pay police, does that violate IGE? Maybe future taxpayers benefit from past policing? Or maybe future taxpayers are damaged by past policing?


    • Posted by Anonymous on September 12, 2016 at 9:26 pm

      I like it, sort of like a commission to investigate a commission. Can’t wait!


    • Posted by AnonActuary on September 13, 2016 at 11:52 am

      Just some soft raindrops so far. The hurricane begins with the first giant lawsuit against Segal or GRS. Few in the actuarial profession will be safe.


      • Posted by Anonymous on September 13, 2016 at 4:08 pm

        Guess we’ll have to wait for the torrential downpour of insurance companies suing the reinsurance companies and making the lawyers rich….


  4. More and more people are beginning to realize that Defined Benefit plans like public pensions are not sustainable, including the private sector which has more or less done away with them. Here is my solution to this looming crisis that is only going to get worse without any correction of course:

    Please help spread the word…


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