NJ Actuarial Reports – The Believable Numbers 6/30/17

The June 30, 2017 actuarial reports for the New Jersey Retirement System are out and there are a few numbers therein that can be taken seriously (none involving liabilities or even the market value of assets considering all those self-valued alternative investments). The main purpose of these official actuarial reports is to determine the ‘required’ contributions which practically all parties have a vested interest in understating so we get a bunch of fanciful numbers where possible. However, these numbers you can’t pretty up:

 

The next few blogs will examine the 2017 valuation reports in detail but when you put these believable numbers in historical perspective going back to 6/30/11 a definite pattern emerges with outflow steadily rising and inflow varying with political whims.

23 responses to this post.

  1. Posted by Tough Love on December 19, 2017 at 4:47 pm

    Oh My………….

    Hey, Tim Alexander, Triune self-proclaimed “economist”, is Mr. Bury wrong too, as he too is showing $10.4 Billion in total pension payouts, NOT your figure of $17.3 Billion ?

    Reply

    • Posted by Anonymous on December 19, 2017 at 4:48 pm

      Shut up!

      Reply

      • Posted by Tough Love on December 19, 2017 at 5:01 pm

        We understand……….. you and your ilk (being public sector workers/retirees) SUPPORT Tim’s proposed “bailout” of Public Sector pensions …….. or as actuary May Pat Campbell more correctly describes Tim’s “model” …. DRAIN THE TREASURY.

        Reply

        • Posted by George on December 20, 2017 at 10:15 am

          Tim’s “model”

          The money for the proposed bailout has to come from somewhere, and the Fed claims to be generating it. It is possible that the people behind the pension rehabilitation loan scheme are thinking the same thing. Is there a link to how the actual loan program will work?

          Reply

    • Haven’t followed that part of the blog recently but if there was a $17.3 billion payout number that would have included OPEB payouts since that is a pass through for some reason and $7 billion seems about right for OPEB cost.

      Reply

      • Posted by skip3house on December 19, 2017 at 5:42 pm

        OPEB Other Postemployment Benefits (or OPEB) are benefits (other than pensions) that U.S. state and local governments provide to their retired employees. These benefits principally involve health care benefits, but also may include life insurance, disability, legal and other services.
        You guys drive me nuts with your shorthand because you touch this alot….

        Reply

    • Posted by Anonymous on December 19, 2017 at 5:19 pm

      TL wrong, say it isn’t so. Nope there’s ALWAYS a twist & shout b/c TL never pouts!

      Reply

    • TA:
      “For 2016 the pension paid $17.3 billion in benefits while new additions (including investment income) was $11.3 billion.  Based on a single year this fund is in trouble, but what of three, five, and eight year trends?”

      Clearly the point is that outgo is greater than income (the fund is in trouble). In answering his own question, the three an five year trends are similar; more going out than coming in.

      TL:
      “Tim, If you werren’t such a pompous ass …… ”
      ………………………
      Way to elevate the discussion, Mr. Love. You makes us proud.

      SMH

      Reply

      • Posted by Tough Love on December 19, 2017 at 10:51 pm

        SMH,

        YOU talk about elevating a discussion ……….. lol.

        Reply

      • Posted by Tough Love on December 19, 2017 at 11:29 pm

        SHM,

        You seems annoyed that I called Tim “a pompous ass”, making it sound like I did that while correcting his figure from $17.3 Billion to $10.4 Billion.

        Why didn’t you show the TRUE REASON why I called Tim “a pompous ass”?

        If you look back a the specific comments, you’ll see that I called him a pompous ass BECAUSE in response to my correcting him HE replied to me (in part) as follows:

        “Observing your math is as flawed as your thinking, I wish I was in retail and could give you change. You would never know what was correct. You are a truly remarkable creature, one that should be studied in a zoo. With one lungful of air you scream that all in public pensions should be punished. In the next you misquote facts to defend the same.”

        Given that response from Tim, my “pompous ass” response to Tim was eminently justified.

        ******************

        And do you know what YOU are for intentionally making my response to Tim appear to be something that it was not?

        A Pompous Ass.

        ,

        Reply

  2. Posted by Anonymous on December 19, 2017 at 4:49 pm

    And what happens when member contributions go to zero after switching from a DB to a DC? Considering the net projected health coverage savings is ~$1B, if you can believe them on that? Any constitutional amendment on reforms needs to include funding the accrued benefits or it’s DOA!

    Reply

    • Posted by PS Drone on December 19, 2017 at 7:51 pm

      The only reforms coming are reductions in retiree benefit payments.

      Reply

    • Posted by Tough Love on December 19, 2017 at 11:43 pm

      Anon,

      The Commission’s SPECIFIC recommendation re that Constitutional-funding amendment follows. Pay particular attention to the 2-nd paragraph (and the words “only” and “first”).

      ****************************
      Commit the State, by constitutional amendment, to a set payment schedule intended
      to stabilize, over 30 years, funding of State pension benefits earned to that date.
      Most of the added cost of the scheduled payments can be realized from health
      benefits reforms.

      Crucially, this commitment should only be made in exchange for reforms making benefits affordable to the State’s taxpayers. Constitutionalizing funding without first ensuring the funding is sustainable is an invitation to fiscal chaos. It would repeat, in an irrevocable manner, the cycle of extending benefits beyond taxpayers’ funding tolerance that led to the current crisis.

      *******************************

      Reply

      • “Commit the State, by constitutional amendment, to a set payment schedule intended to stabilize, over 30 years, funding of State pension benefits earned to that date.”

        So most of that cost would be incurred after Generation Greed has cashed in and moved for Florida. Meanwhile, younger generations of public employees would be screwed because the only benefits protected would be those previously earned.

        Pretty damn evil.

        Reply

        • Posted by Tough Love on December 20, 2017 at 5:47 pm

          You won’t see me DISAGREE that there is MORE than sufficient justification to materially reduce Public Sector pension PAST service accruals, both for those still active and for those already retired.

          In fact, doing so is not only justifiable, but fairer to the younger/shorter-service actives. Anyone with a brain now knows that most of the pension contributions of the younger/shorter-service actives aren’t being saved and invested for THEIR retirements, but instead are being diverted to continue the grossly excessive pensions of those that came before them.

          Reply

  3. Posted by readslikeamafiabook on December 19, 2017 at 9:07 pm

    I have an idea that NJ unions, democrats and democrat gov do not recognize what 1 billion is, never mind 10 billion. Just my thought.

    Reply

    • Posted by skip3house on December 19, 2017 at 9:34 pm

      Maybe twenty thousand NFL full stadiums, each with fifty thousand fans for a billion people? ‘Course ten times that for ten billion…? Good point.

      Reply

  4. When pension funds are this deep in the hole, the only way out is for contributions to rise as high as benefit payments, allowing long-term returns (if any) to gradually restore the asset base until it is enough to cover most benefits.

    That looks like another $5 billion going in, and rising. The BEA reports the total personal income of NJ residents was $550 billion in 2016, and the month earned at work in the state was $364 billion. It would appear that if people don’t flee the state to avoid funding their previously shirked burden, then one percent more is going to have to be taken out of their hides. Plus money for the state’s infrastructure deficit.

    Reply

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