State Pension Depletion Dates

When I started looking at public pensions so many years ago the first thing I noticed was how, though ongoing and accruing benefits, all seemed to have negative cash flows where benefit payouts exceeded deposits. Coming from the private-pension world I could not see how these plans could survive. As it turns out they can’t and updated census data on public pension plans give us an idea as to when plan pension assets for each state will be depleted.

Of the 50 systems there is only one (Kansas) with positive cash flow. Of the others all are projected* to go bust. The top two are no surprise but….

.

.

.

* No trust earnings were assumed which is reasonable considering that we have a ‘correction’ coming with all these alternative investments and plans that need liquidity cannot be expecting to get
long-term investment returns.

26 responses to this post.

  1. Posted by Anonymous on May 29, 2017 at 3:26 pm

    Happy Memorial Day, great info for State govts – what about the already pay as you go Fed pensions? Deflection no, fact yes!

    Reply

    • Posted by dentss dunnigan on May 29, 2017 at 3:44 pm

      It’s called the printing press ……never fight the fed .

      Reply

      • Posted by Anonymous on May 29, 2017 at 4:21 pm

        Oh ok gotcha, screw everyone else though – God bless the State side military pulling dangerous desk duty!

        Reply

      • Posted by Anonymous on May 29, 2017 at 4:37 pm

        BTW there’s a known/unknown economic cost to printing money and it isn’t justification for perpetuating pay as you go DB Fed pensions & benefits including Military. Even IF State and Local governments COULD continue to afford their DB pensions it wouldn’t change the opposition from you and the TL’s aka Ann’s on this blog.

        Reply

        • Posted by Anonymous on May 29, 2017 at 5:16 pm

          Two thoughts …….

          (1) I agree that FED pension should be funded as earned ….. likely making them lees generous and more comparable to what Private Sector workers typically get from their employers.

          (2) A resounding YES ….. even IF we COULD afford the pensions currently promises NJ’s State and Local governments workers, it wouldn’t change my opposition.

          Now let give that some thought……..

          Suppose that NJ’s Public Sector pension Plans were 2, 3 or 4 times MORE generous than the grossly excessive level in place today, and that NJ was rolling in money because say the Plan investments were mainly in equities and the markers went up 20% annually for 10 years.

          Does that mean that NJ has no better use of that windfall …. such as greater investments in educating our children, in repairing our crumbling infrastructure, as care for the elderly, sick, and legitimately unemployed …….. than unnecessarily OVERCOMPENSATING our Public Sector workers(FAR in excess of what compensation would be in similar Private Sector jobs?

          Of course NOT !

          The PROPER questions are NOT, what is the “required funding”, and NOT “can we afford it”, but are we providing our Public Sector workers a Total Compensation package (wages + pensions + benefits) EQUAL to Private Sector workers in jobs with reasonably comparable risks and requiring reasonably comparable education, experience, skills, and knowledge.

          WE do NOT owe Public Sector workers, nor SHOULD WE grant Public Sector workers greater compensation ….. even if we could afford it.

          Reply

          • Posted by Anonymous on May 29, 2017 at 10:16 pm

            We’ll then let’s be clear to those who think they’re safe, the Buck (actuarial consultant) doesn’t stop here. Next up, the March onto D.C. (defined contributions in the District of Columbia)!

          • Posted by Anonymous on May 29, 2017 at 10:48 pm

            To hell with “private sector workers” comparisons. They often do much better (or much worse) than the market. If the elected politicians had contributed the ARC then this would not be an issue. More to the point… nobody would get reelected. I want my pension promise! I put my life on the line and now it’s time to pay. I gambled….I did not die. PAY ME!

          • Posted by Anonymous on May 29, 2017 at 11:42 pm

            Quoting Anon……….. “To hell with “private sector workers” comparisons.”

            Oh, doesn’t fit with your agenda to keep riding this ludicrously generous gravy train at Taxpayer expense?

            Got a problem with EQUAL ?
            *********************************************

            And then back to the SAME BS with ……. “If the elected politicians had contributed the ARC then this would not be an issue. ”

            Yup, but as I summarized above, THAT is NOT the proper issue/question …… compensation EQUAL to (but no greater than) their Private Sector counterparts IS.
            **********************************************

            Quoting ……….. ” I want my pension promise!”

            Screw you porker !

        • Posted by S Moderation Douglas on May 29, 2017 at 11:13 pm

          The military pensions are pre funded. (The government way, if you can follow this.)

          http://www.rand.org/pubs/research_briefs/RB3005/index1.html

          Reply

          • Posted by Anonymous on May 29, 2017 at 11:54 pm

            Interesting, but sounds like the same kind of shenanigans behind the Social Security Trust Fund.

            Then are no financial assets (e.g., share in APPLE) that can be cashed-out to pay benefits WITHOUT the Gov’t raising that cash by either lowering expenditures or raising taxes.

  2. Posted by boscoe on May 29, 2017 at 5:22 pm

    Your point is well taken but it would be better taken without your doomsday scenario timeline that assumes no earnings on the corpus of the retirement systems. If that occurs, we have bigger problems than DB pension plans.

    Reply

    • To that point we have this twitter reply and my comments:

      Joshua Rauh‏ @joshrauh
      Replying to @jbken
      What if benefit payouts grow faster than contributions?
      8:39 PM – 29 May 2017

      Replying to @joshrauh
      John Bury‏ @jbken
      A reasonable assumption, especially in NJ, which offsets the assumption of no interest earnings.
      Also all that ee-cont money which means true bankruptcy would not be $0 but at the value of those contributions. For NJ – 2024.

      Reply

  3. Posted by S Moderation Douglas on May 29, 2017 at 11:29 pm

    Good news… When CalPERS runs out of cash, I will be 120 years old.

    Bad news… Nobody can predict 50 days, let alone 50 years.

    Reply

  4. Posted by S Moderation Douglas on May 30, 2017 at 12:36 am

    “Yup, but as I summarized above, THAT is NOT the proper issue/question ……”

    It is as good as any other.

    There is consensus among the experts. Even with pensions and benefits, some public workers earn more than equivalent private workers, some earn less, and many in the middle are roughly equal.

    And… It is the law. Get used to it.

    I think, therefore I am… still just another “opinion”.

    Reply

    • Posted by Anonymous on May 30, 2017 at 1:17 am

      Quoting SMD …..

      “There is consensus among the experts. Even with pensions and benefits, some public workers earn more than equivalent private workers, some earn less, and many in the middle are roughly equal. ”

      Likely true, but what financially impacts Taxpayers is that for ALL Public Sector workers taken TOGETHER, Public Sector workers have a huge Total Compensation advantage…………. to be specific, 23%* of pay in BOTH CA and NJ per the AEI compensation study.

      Taxpayer …… how much more would YOU BE if YOU had 23% of pay to save and invest EVERY YEAR of YOUR career …. $500,000 ?, $1 Million ?, perhaps $2 Million ? *****************************************************************

      * 25% EXCLUDING Safety workers. Had Safety workers (with their FAR greater than average compensation) been included, that 23% Public Sector total compensation ADVANTAGE would be considerably GREATER.

      Reply

  5. Posted by S Moderation Douglas on May 30, 2017 at 1:49 am

    What financially impacts the taxpayer is that they are getting a very good deal on tens of thousands of doctors, lawyers, managers, etc. They are getting hundreds of thousands of engineers, teachers, scientists, technicians, etc., for costs roughly equal to similar private sector workers.

    Got a problem with EQUAL ?
    *********************************************

    And they are giving opportunities to women and minorities much more fairly than the “free market”, as well as reasonable benefits for the less educated to provide for their families instead of relying on social services. It is a win, win, win.

    Many public pension systems are in trouble since the Great Recession. Many private pensions are in trouble for the same reason, as are many private IRAs and 401(k)s. They all have been and will continue to adapt to the new normal.

    https://www.google.com/url?sa=t&source=web&rct=j&url=https://m.youtube.com/watch%3Fv%3DXKGBgb0XKVs&ved=0ahUKEwjfuLOr9ZbUAhVql1QKHfJpDWMQo7QBCB0wAA&usg=AFQjCNE2JEg-1w2DlX73DPtAxYW13uCncQ&sig2=jxRDsFL3a_KBhaQKTBH1fg

    Reply

    • Posted by Anonymous on May 30, 2017 at 9:56 am

      No, It’s simply unnecessary & excessive compensation …… a THEFT of Private Sector Taxpayer wealth.

      EQUAL, but NOT better……………. on the Taxpayers’ dime.

      Reply

  6. Posted by MJ on May 30, 2017 at 6:48 am

    The article is talking about state pension plans and depletion dates….why do the same bloggers always start talking about the Federal pensions????? The article is titled “STATE Pension Depletion Dates”……it might be more productive if comments were limited to the topic of the article posted…….

    Reply

    • Posted by Anonymous on May 30, 2017 at 9:49 am

      Sure if that fits your self interested agenda.

      Reply

    • Posted by Anonymous on May 30, 2017 at 10:01 am

      They do that to divert attention away from the issue at hand ………. NJ’s massive pension problem,………. because they are scared NJ’s Taxpayers may finally understand how they been ripped-off by the insatiably greedy Public Sector workers (having BOUGHT NJ’s legislature with BRIBES disguised as campaign contributions and election support) and DEMAND a reversal of those grossly excessive pension (AND benefit) “promises”.

      Reply

    • Posted by Anonymous? on May 30, 2017 at 3:49 pm

      Might be more interesting if there actually we’re productive arguments.

      Reply

  7. Posted by bpaterson on May 30, 2017 at 10:07 am

    why can’t the payouts be in bitcoins?

    Reply

  8. […] on a study of depletion dates Pennsylvania state retirement systems area fairly close to New Jersey in negative cash flow and […]

    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: