Actuary Watching NJ Politicians Like a Hawk

Not that it will penetrate thick skulls with other priorities, especially coming from a rookie legislator in the minority (and declining) party but Assemblyman (and pension actuary) Ned Thomson took a shot…with a bullseye on the interaction between a plan’s funded ratio and funding interest rate:
.

50 responses to this post.

  1. Posted by Tough Love on April 13, 2018 at 8:02 pm

    I love to hear him (someone they couldn’t blow off as not knowledgeable) say something like this ………..

    You know that really poor “official” funding rate we publish every year ? Well if we (NJ) used the SAME assumptions & methodology that is commonly used in the valuation of Private Sector DB pension Plans, it would be just about 1/3 LOWER ………… and NOT because the Private Sector Plans are being too conservative, but because our assumptions &methodology is far too aggressive, primarily by ignoring the “risk” inherent in equity market investments. That risk is still there, it’s just unfairly being passed along to the Taxpayers.

    Reply

    • Posted by El gaupo on April 14, 2018 at 8:36 am

      Let’s stop future accruals of pension credits effective 2 years from now. Lol. I’ll be retiring anywhere from 2-7 years. Pfrs will be fine for a longer time than the others. Not worried….yet. By that time, I’m sure their not gonna come after the geezers. Will I officially be a geezer at 75?

      Reply

      • Posted by Stanley on April 14, 2018 at 12:28 pm

        Officer Gaupo Uno, being a geezer for you might be an improvement. Besides that, you are guilty of counting your “winnings” while you are still at the table. Wait until you actually have the loot before you laugh all the way to the bank.

        Watching this train wreck unfold is better than football.

        Reply

      • Posted by geo8rge on April 14, 2018 at 8:12 pm

        “stop future accruals”

        Kentucky put future teacher hires on a cash balance plan. I think this means that for new hires this is replacing future DB accruals with cash payments. Kentucky teachers went on strike, but now seem to be looking at legislative action to repeal the law.

        Reply

  2. Posted by Anonymous on April 14, 2018 at 8:52 am

    El gaupo…..I find it concerning that you appear to only care about if you get yours…what about all of the other hard working taxpaying citizens both public and private???? Yes, the pension system is going down only a matter of how and when and yes everyone will be affected including the old geezers…….

    If only your vote dependent legislators would man up and have the balls to say what is really happening perhaps things would turn out differently

    Hopefully, you are making a joke in your comment

    Reply

    • Posted by PS Drone on April 14, 2018 at 4:41 pm

      He is no different than the rest of the drones. They couldn’t care less about anyone other than themselves. I got mine….the rest of you can go f yourselves. Oh, and keep paying your ever increasing taxes.

      Reply

      • Posted by Tough Love on April 14, 2018 at 8:19 pm

        I can picture him freaking out if the market crashes shortly after he retires and PFRS, heavy in equities, loses half it’s assets, and has no option but to reduce payouts to retirees.

        Yes …………. it CAN happen.

        Reply

  3. Posted by Anonymous on April 15, 2018 at 7:28 am

    I just love how el gaupo and others with his mentality believe that they are untouchable and will ride off into the sunset with a shit load of money while the rest of us are expected to work until we are 75 to pay for it all then are thrown a few crumbs in retirement

    The reality is that none of us really know what will happen……other than at some point the pensions will crash and burn…best to depend on yourself and own resources for retirement instead of depending on mad dog politicians who will turn in a heartbeat when the winds shift…….

    There was just an article I can’t recall where I saw it…I think out in WA or OR where a cop retired at age 47 with an 80,000 a year pension, tax free……really?? and they wonder why the system is broken
    He was arrested for sex trafficking…will be interesting to see if he gets to keep the pension

    But hey,,, we the taxpayers we are all good for it right???

    Reply

    • Posted by PS Drone on April 15, 2018 at 9:50 am

      An example of the type of logic prevalent in the public sector. Any reasonably well run DB plan would probably place a cap on benefits so that this idiocy never happened:

      Reply

      • Posted by El gaupo on April 15, 2018 at 10:06 am

        Oh, for Christ sake guys. I’ve commented on this blog many times and as at least TL would say, based on most of my posts that, yea he’s joking. I’ve presented many other options and have seriously not advocated a hurrah for me fuck you attitude. I was trying to get a rise out of you and it worked. I do that to keep the site interesting as it is boring to read “got a problem with equal?” “3.5 to 4 times the average” etc. a million times. No offense TL, I honestly think I would like you In real life. Lol. Lighten up. The same way I don’t take seriously the “moochers with a GED” crap. I’m sure most of you wouldn’t think the cop living down the street from you raising his family and coaching your kids is a moocher with a GED. You may want his pension curtailed and that is understandable. The anonymity of this blog allows people to print what they would say to friends in their living room but maybe not so much at a town hall meeting. Which is fine, not everyone wants to get involved with the bullshit. I get that. Peace out for now. 😊.

        Reply

        • Posted by El gaupo on April 15, 2018 at 10:12 am

          Cmon guys. Be real. Most of you that agree with TL do in fact scroll through those long cut and paste posts without reading them. Lol. It is a breath of fresh air when she deviates from the script a little bit….now peace out for real. ☀️

          Reply

      • Posted by Stanley on April 15, 2018 at 11:21 am

        Great post, great article. Fifteen, twenty years of higher pension costs! From already abusive, ridiculous, unaffordable levels. I can’t wait to see how Illinois handles the Harvey problem. There are many people depending on the no diminishing of pensions who will fight like cats and dogs to keep it that way. IMO the Miller Kline Pension Act of 2014 is about as good as the government can do to enable a reasonable resolution to this problem. I don’t know if it could be rewritten to bring state and local government pensions under its provisions, but I can’t see what else could be done. This is one nasty problem.

        Reply

      • Posted by Tough Love on April 15, 2018 at 11:50 am

        I’d love too read our resident CA-retiree-commentator Stephen Douglas’s attempt to justify this

        Reply

      • Posted by Anonymous on April 15, 2018 at 1:08 pm

        El gaupo, I hear what you are saying and at least you owned up to your comments. Yes, sometimes it is funny to rile people up and it helps to have a sense of humor. I don’t think anyone on this blog or anywhere else is not in favor of cops making decent salaries, participating in their community and raising their families as neighbors……..but the ridiculous nature of all this blog talks about is well….just ridiculous and it seems as though you know it

        Have a great day!

        Reply

        • Posted by El gaupo on April 15, 2018 at 3:31 pm

          Lol. Back at ya. You seem to get it. Most of us aren’t “moochers” just the same way most taxpayers are NOT of the opinion that we are moochers. Take any issue (guns, taxes, gambling, etc) and probably 90% of folks are near center on the issues. Some lean a little left and some lean a little right. But most folks aren’t the hardliners we see on fox or cnn. Most are just ordinary people.

          Reply

          • Posted by Stephen Douglas on April 16, 2018 at 12:07 pm

            You can’t tell the players without a program.

            Most “public” workers… aren’t. Only about twenty percent of public workers are “full career” workers. About half don’t even stay long enough to vest in the pension system. A lot of public workers are just private workers in one of several job changes they will go through in their working years (average public tenure eight years). The really big difference in pay and benefits is not between public and private workers; it is between small and large companies. Workers in companies with fewer than one hundred workers earn far less than those in companies of five hundred or more.

            Except for safety, private and public sector workers retire at about the same age. Which is why I say…

          • Posted by Tough Love on April 17, 2018 at 2:16 am

            Quoting Stephen Douglas …………….

            “Except for safety, private and public sector workers retire at about the same age.”

            Although you don’t state such, clearly the “implication” you are trying to convey, is that not only do they retire at the same age (VERY questionable in and of itself) but on an equal footing in terms of retirement security (pensions or 401Ks) and retiree healthcare coverage.

            No Stephen, THAT is about as far from a true picture of the actual situation that one can conjure up.

          • Posted by Stephen Douglas on April 17, 2018 at 11:57 am

            More diversion. You and I BOTH know it’s the average age that matters.

            Sure, there are different income groups that retire earlier or later than others, in both the public and private sector. Even the supposed progressivity of Social Security is dampened by factors such as retirement age and longevity difference (10-15 years) of higher income groups.

            Seriously, Mr. Love, if you want to be anal about EQUALITY you’ll need a supercomputer lest someone get a penny more than you.

            Or,

            There’s always the old reliable fallback protocol…

      • I agree with Ed Ring, again…

        “Impose a ceiling on pension benefits to retirees, based on the principle that pensions are supposed to ensure retirement security, not lavish affluence. Similarly, establish a floor for pension benefits to retirees, based on the principle that employees at the low end of the pay scale are nonetheless entitled to retire with an income sufficient to live with dignity.”

        However, I don’t get to be the judge and jury on that, and for good reason.

        This is a good example, though, of why we shouldn’t “assume” all, or most, pension systems are the same.
        ——————————————
        Sensationalism is a bitch. The headline, and this excerpt really catches the eye…

        It is $76,111.

        Per month.
        ——————————————
        For anyone reading the entire article, that is just a drop in the proverbial bucket. And probably -not- Oregon’s biggest pension problem.

        Mr. Robertson’s pension is “only” 58 percent of final salary ($1,563,517)
        And Mr. Bellotti’s is 42 percent ($1,320,236)

        https://gov.oregonlive.com/pers/
        ——————————————-
        How about a pension 284 percent of final salary?

        Read the article and check the list of “matching” or “tracking accounts” (discontinued for new employees in 2003)
        ——————————————-

        Also, honorable mention in the title “…Why States and Cities Are Short on Cash”

        Despite these huge outliers, according to the article, “The state is not the most profligate pension payer in America…”

        Not by a long shot. “Why are states and cities short on cash?” How about this…

        “It wasn’t until 2016 that average state tax collections returned to pre-2008 levels.”

        States and cities since 2008 have been trying to recoup losses in pension fund assets, while at the same time receiving less in revenue and incurring higher costs in social welfare and other programs. It’s a wonder we’re still alive.

        Reply

        • Posted by Tough Love on April 15, 2018 at 6:35 pm

          Quoting ………………….

          “Similarly, establish a floor for pension benefits to retirees, based on the principle that employees at the low end of the pay scale are nonetheless entitled to retire with an income sufficient to live with dignity.””

          No.

          WHY should Taxpayers pay more than MARKET RATE for any job (as determined by the compensation offered the 85% of all workers who are employed in the PRIVATE Sector where employers are free to compete for talent, and NOT in the PUBLIC Sector where compensation is distorted by the underhanded/backdoor dealings between the Public Sector Unions and our self-interested Elected Officials ?

          And if their compensation is insufficient to meet basic needs (food, shelter, clothing, healthcare, etc.) they should have to address those needs via the Social Services System ………. in the SAME way that Private Sector workers in such circumstances must do now.

          Private Sector Taxpayers are FED UP with being the “sucker” in the equation.

          Reply

          • Posted by El gaupo on April 15, 2018 at 7:21 pm

            Yea…cause so many taxpayers who are successful are selling in the prime of their lives due to high property taxes. Home prices suggest otherwise. Sorry babe, the deal is I get a pension. You knew that when you purchased a home in NJ. The benifits have not increased. At least Pfrs hasn’t.
            Make your money here and do the smart thing. Move to a more retiree oriented state, if you want.

          • Posted by Tough Love on April 15, 2018 at 9:18 pm

            El gaupo, Up until now you’ve been at least reasonably truthful ……… albeit wrong if you think you deserve such rich pensions.

            Now you stated …… “The benefits have not increased.”

            It’s VERY hard for me to believe that you are unaware of at least 2 MAJOR pension improvements during YOUR career.

            (1) About 15 years ago The %-of pay pension for OPFRS service retirement at 25 years was increased from 60% to 65%, and

            (2) Gov. De Francisco raised all pensions by 9% in 2001.

          • Posted by Stephen Douglas on April 17, 2018 at 1:18 pm

            See, this is why we can’t have nice things…

            If you disagree with someone, don’t research to verify your opinion, just throw in some snide insults (“reasonably” truthful ……… albeit wrong…?)

            Then throw in your “opinion”, right or (usually) wrong. Use CAPS LOCK liberally, Shirley no one will doubt you then!

            Which of the above statement(s) is true?

            (1)
            (2)
            None of the above.

            And, don’t call me Shirley.

      • Posted by El gaupo on April 15, 2018 at 11:26 pm

        TL. You could not be more wrong. I was hired in 1995. The rate then has been 65% at 25 years. It is now 60% at 25 years. And, here is the big mistake you make…. the 2001 enhancement did NOT….I repeat did NOT….apply to PFRS. Part of that bill was going to increase Pfrs pensions to 70% at 25 and 75% at 30. This was to take effect once the pension fund was funded at 104%. Obviously it never happened and was repealed for good in 2011. Again, Pfrs was not enhanced in 2001 or since. The ONLY enhancement was the 20 and our bill, which gives 50% at 20 years for people enrolled prior to 2000. Almost no one takes this benifit and pulls the kin at 20 years. Please do your research. If I’m wrong(I know I’m not…I’m in the system and fully aware of the benifits). I will totally it crow. And if you are wrong you need to admit it as well ON this blog. Lol. Unless u got a problem with equal 😉

        Reply

        • Posted by El gaupo on April 15, 2018 at 11:28 pm

          Excuse the typos. IPhone is tough for lengthy posts. You get the drift.

          Reply

        • Posted by Tough Love on April 16, 2018 at 1:35 am

          I wasn’t sure if the 9% applied to NJ’s Police (actually 9.09% because it is sourced from a change from 1/60 to 1/55 per-year of service factor …. and that formula isn’t applicable to NJ police).

          I was pretty sure of the other one (going from 60% @ 25 Years to 65% @ 25 years) and a quick Google found this:

          “Governor DiFrancesco increased the police and fire and corrections officers ’
          pensions to allow for 20 and out retirement at 50% and 65% pensions at 25 years of service.”

          Source:

          http://cwanj.org/wp-content/uploads/2015/05/PensionTermsandTimelineFinal.pdf

          Reply

        • Posted by Earth on April 17, 2018 at 4:03 pm

          Earth to El gaupo,

          El guapo:
          “If I’m wrong(I know I’m not…I’m in the system and fully aware of the benifits). I will totally it crow. And if you are wrong you need to admit it as well ON this blog. Lol. Unless u got a problem with equal.”

          TL:

          “I wasn’t sure if the 9% applied to NJ’s Police…”

          “I was pretty sure of the other one…”
          ————————————————————-
          Not exactly an apology. Not even a mea culpa. But at least a little less snide than the original post. I believe TL is evolving.

          Reply

          • Posted by Tough Love on April 17, 2018 at 7:41 pm

            Hey, why not show my FULL comment (above) ……………
            ——————————————-
            I wasn’t sure if the 9% applied to NJ’s Police (actually 9.09% because it is sourced from a change from 1/60 to 1/55 per-year of service factor …. and that formula isn’t applicable to NJ police).

            I was pretty sure of the other one (going from 60% @ 25 Years to 65% @ 25 years) and a quick Google found this:

            “Governor DiFrancesco increased the police and fire and corrections officers ’
            pensions to allow for 20 and out retirement at 50% and 65% pensions at 25 years of service.”

            Source:

            http://cwanj.org/wp-content/uploads/2015/05/PensionTermsandTimelineFinal.pdf
            ———————————————-

            No apology was given (or needed).

            As to the 60% going to 65%, I was actually much more than “pretty sure” of it because still remember first hearing of it on the radio while driving, and thinking …… how outrageous, they’re ALREADY off-the-wall-too-genrous.

            YUP, my financial training/education goes back a long way. I just didn’t remember that that Police pension increase was so long ago.

          • Posted by Earth on April 18, 2018 at 12:17 am

            Earth to TL,

            No apology was expected. You basically called the guy a liar based on faulty memory. YUP, typical boorish TL post.

          • Posted by Tough Love on April 18, 2018 at 12:48 am

            Responding to Earth………..

            My statement to El gaupo was :

            “It’s VERY hard for me to believe that you are unaware of at least 2 MAJOR pension improvements during YOUR career……..”

            (and it appears I was half-correct)

            Dosen’t sound like I ….”called the guy a liar”.

            But YOU certainly sound like an A*hole.

          • ” El gaupo, Up until now you’ve been at least reasonably truthful ……… albeit wrong if you think you deserve such rich pensions.”

            “reasonably truthful” = liar
            ” Up until now” = liar

            ” at least 2 MAJOR pension improvements during YOUR career……..”

            (and it appears I was half-correct)”

            Half correct where?

          • Earth to Mr. Love,

            You’re just not nice.

            You can have a different opinion and still be nice.

            Please be nice.

            Earth would appreciate that.

          • Posted by Tough Love on April 18, 2018 at 1:33 am

            Earth………… you’re an A*hole.

          • Half correct where?

          • Mr. Love,
            ” It’s VERY hard for me to believe that you are unaware of at least 2 MAJOR pension improvements during YOUR career.”

            (1) Was increased before his career…

            1989 PFRS-Special retirement benefit increased from 60 percent to 65 per-cent of average final compensation with 25 years ofservice; actuarial reserve funding for COLA benefits provided; State to pay annual contributions to the system in the amount of 1.8 percent of covered compensation to fund the increase in the special retirement benefit granted in 1979 (L. 1989, c. 204).

            https://www.google.com/url?sa=t&source=web&rct=j&url=http://pensionresearchcouncil.wharton.upenn.edu/wp-content/uploads/2015/09/0-8122-3578-9-15.pdf&ved=2ahUKEwiJ3L_mh8PaAhUQQ60KHfRFC8o4FBAWMAJ6BAgJEAE&usg=AOvVaw1_VLkJA0-1mIQ9Y7iYPf-n

            (2) Did not apply to PFRS.

            Two up, two down

          • Posted by Tough Love on April 18, 2018 at 3:15 am

            Stephen Douglas, do you think the readers don’t know that you also post as “Earth” ?

          • 1) A rose by any other name would smell as sweet.

            2) “Half correct” where?

            3) Just be nice. It’s not that hard, and it’s contagious.

          • Posted by Tough Love on April 18, 2018 at 12:23 pm

            Stephen Douglas/Earth,

            I didn’t write THIS………….

            https://patriotpost.us/articles/55404-public-employees-resist-pension-reform-as-crisis-looms

            Are you right and EVERYONE else wrong ?

          • Do you actually believe Louis DeBroux and/or The Patriot Post to represent “EVERYONE else” ?

            Have you ever even heard of either before today?

            For the record, I don’t disagree with many of the statements in the article. Yes, Virginia, there is a pension crisis. There is nothing new or earth-shaking… all the right wing talking points are here, including the requisite loaded adjectives. Add a few strategically placed CAPS LOCKS, and he could be you.

            Louis apparently didn’t get the memo on the ROOT CAUSE. That’s just you, and “EVERYONE else” doesn’t necessarily agree.

            Pension reform is necessary. The Greatest Recession amplified many of the underlying weaknesses in many public pension plans. That’s actually a good thing. At the same time, it simultaneously depleted assets in all public (and private funds) and reduced revenue for several years, making it nearly impossible to replenish the funds (again, in both public and private pensions). That’s maybe too much of a good thing, but it is what it is, now we need to deal with it.

            Mr. DeBroux…

            “The most logical and fair path is to put all new state employees into a defined-contribution plan like a 401(k) and give them responsibility for their own retirement, ending pensions in future negotiations.”

            Not saying I am right and EVERYONE else is wrong, but I disagree. Defined Benefits with ERISA type limits should still work just fine for many public systems. And yes, it may require, in part, some reduced pensions and increased employee contributions.

            Mr. DeBoux…

            “Nationwide, states have just 66% of assets on hand needed to meet pension obligations, and many states have under 50%; Kentucky and New Jersey are worst off, with just 31% of needed funding.”

            This opinion piece is one of a rash of opinions following the release of the PEW study. $1.4 trillion gap, and 66 percent funded are the headline grabbers. Read the entire article. Follow some of the links. Think for yourself. 66 percent is an “average”. You understand averages, do you not? As in “the Flaw of averages”. The average Californian has one testicle and one ovary. All pension systems are not the same, and “generous pensions” are not the common factor. There are some states with more highly compensated employees which are reasonably well situated, and some states with “market level” pay and pensions which are in the death spiral.

            Many states are underfunded because of actuarial practices that need reforming, but the worst states are those with actuarial problems _and_ the lack of fiscal discipline to meet even the most meager required contributions…

            DON’T PAY THE BILLS, THE DEBT GETS LARGER

          • Posted by Tough Love on April 18, 2018 at 8:06 pm

            Stephen Douglas,

            NO, not “DON’T PAY THE BILLS, THE DEBT GETS LARGER”, but ……………

            DON’T OVER-PROMISE AND THE BILLS ARE A LOT SMALLER

          • Posted by Stephen Douglas on April 19, 2018 at 8:20 pm

            (and it appears I was half-correct)

            Half correct where?

          • Posted by Tough Love on April 19, 2018 at 9:00 pm

            SD,

            I was correct that the Police pension WAS increased from 60% to 65% of final pay after 25 years of service but (assuming it was a 1989 change …. earlier than I had remembered), I was wrong that it happened during El gaupo’s career.

            Big whoop !

          • See how easy that was?

            Admit it. It was Cathartic.

  4. Posted by Tough Love on April 18, 2018 at 10:10 pm

    Quoting Stephen Douglas………….

    ” The Greatest Recession amplified many of the underlying weaknesses in many public pension plans. That’s actually a good thing. At the same time, it simultaneously depleted assets in all public (and private funds) and reduced revenue for several years, making it nearly impossible to replenish the funds (again, in both public and private pensions).”
    ——————————————————————-

    But does that mean they (Public & Private) now have similar funding ratios?

    Large Single-employer Private Sector Plans have an average funding ratio as of March 2018) of 86% using a discount rate averaging 3.92%.

    Source… http://www.pionline.com/article/20180405/ONLINE/180409897/us-corporate-pension-funding-ratios-dip-in-march-8211-4-reports

    Public Sector Plan have an average funding ratio in the 60s% with an average funding ratio of over 7%.

    If you re-calculated the Public Plan funding ratios using the SAME 3.92% that was the average for the Private Sector Plans, the mid 60s% would drop into the mid 40s%.

    On an apples-to-apples basis Private Sector Plans are almost TWICE as well funded as are Public Sector Plans.

    So is Stephen Douglas……….

    Uneducated/uninformed? A charlatan? A BS artist? A liar?

    Reply

  5. Posted by Stephen Douglas on April 19, 2018 at 4:13 pm

    Quoting Mr. Love…

    “But does that mean they (Public & Private) now have similar funding ratios?”

    It does not. And I never said it did, so no, not “Uneducated/uninformed? A charlatan? A BS artist? A liar?”

    I said the recession simultaneously depleted assets in all public (and private funds) and reduced revenue for several years, making it nearly impossible to replenish the funds.

    It did.

    I even said, again, that public pensions should have ERISA type limits.

    Ad hominems are not nice.

    Be nice.

    Reply

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