Archive for the ‘Public Pensions – General’ Category

ALEC Has It At $6 Trillion*

The American Legislative Exchange Council (ALEC) came out with a report this week based on reviewing the latest available actuarial valuations of more than 280 state-administered pension plans and adjusting the discount rate from an average of about 7.37% to a ‘riskless’ rate of of 2.142%.

I disagree with the methodology since I believe the funded status of a particular plan should be considered when adjusting the wishful discount rates that the plan actuaries who politicians hire are ‘encouraged’ to use.  That is, a plan closer to full funding should be able to use a rate closer to that 7.37% while a pure pay-go plan (Puerto Rico) should use a rate closer to 0% since that is about what they are getting for the few days any money stays in the trust.

Nevertheless there were some nice charts ranking states by Funded Ratio, Unfunded Liabilities, and Unfunded Liabilities Per Capita.  However, I did not see where they had the underlying data so, based on those charts, I decided to extract some other numbers.

Here is the spreadsheet sorted by state and totaled which yields:

  • Total Accrued Liabilities: $9.08 trillion
  • Total Assets: $3.06 trillion
  • Unfunded Liabilities: $6.02 trillion
  • Average Funded Ratio: 33.7%
  • Average Unfunded Per Capita: $18,676
  • US Population: 322.4 million

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* Basically slight rewording with link and spreadsheet updates from a blog last year.

Fitch Rates State Pensions

So which state has the highest pension burden among all 50 states?

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Pensions-Energized Actions!

Reading comments is most interesting to me; a barometer of some sentiment.  I do enjoy an active dialog and always welcome discussions.  This is why I include my email and phone info.

In a prior posting one commentator states; “they (public pensions) must be punished!”  I ask myself how have MA machinists, MI Teamsters, IL firemen, or CA public servants have so injured this pitiable, erroneous wretch?  The answer is they have not.

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Hedge Fund Returns: Too Good?

There are many ways to value investments in hedge funds but, with public pension funds, as the value you put on these investments goes higher it reduces the amount of contributions the sponsors of these plans are told to put in while also increasing the fees of those who sell (and value) those investments. The incentive is all to go high with the value.

Two articles came out this week that should raise doubts about some of these valuation methods.

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NCPERS Looks To Dismantle Public Pensions

Don’t Dismantle Public Pensions Because They Aren’t 100 Percent Funded

So argues the National Conference of Public Employee Retirement Systems (NCPERS) in a new paper that actually does advocate for the dismantling of the current defined benefit funding system.

Their points:

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New Taxes For Public Pensions?

Many public pension funds, with New Jersey in the forefront, have been getting massive earnings by investing in Alternative Investments. Whether these gains are illusory or not is not the issue. The federal government has taken notice.

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Pension Crises and “Hope”-Strange bedfellows?

Timothy Alexander is an economist with a proposal to solve a multi-trillion dollar problem. Here it is.

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