The 2015 Enrolled Actuaries meeting is underway and there promises to be a lot of discussion of public pensions. Three of the four actuaries on the New Jersey study commission are in attendance and according to an nj.com story their work is not done as they have now been tasked with implementing their plan.
More information as it becomes available but first, in the Professional Standards/Ethical Dilemmas Seminar that kicked us off Pat McDonough of the Joint Board updated us on the complaints received against Enrolled Actuaries.
With GASB reports now coming out showing massive liability revaluations for public pensions union-funded think tanks are scrambling to reassure the public that benefits do not need to be cut and everyone just needs to chill. Not unlike:
How relaxed people in Packerland were during the second-half collapse in Seattle is debatable as is the reasoning behind a Synopsis in Plain English put out by the National Public Pension Coalition seeking to undercut the new GASB methodology that replaced the old make-up-your-own-numbers methodology that governments had been using to get into this mess. It may work…..on anybody who doesn’t think too much on the propaganda being spewed.
The wikipedia entry for Jason E. Chaffetz, U.S. Representative from Utah, includes this interesting tidbit:
Chaffetz has pledged to vote against what he calls “trivial resolutions,” including those dealing with sports, such as congratulating the winning team of the Super Bowl. Chaffetz feels that the House could be taking up more important legislation.
You may wonder what type of resolutions Representative Chafetz would take up. Well, on January 21, 2015 he submitted H. RES. 41 which was referred to the Committee on Education and the Workforce and, if only for the laundry list of real problems enumerated, I post stating with the first Whereas:
The Center for Retirement Research just released a six-page issue brief trying to answer that question by looking at factors like:
- investment returns;
- deviations from actuarial assumptions (e.g. workers living longer than expected);
- benefit changes; and
- assumption changes (e.g. long-run investment returns).
I can make it even briefer. In fact, two words….
John Lanchester provides a useful service in his new book How to Speak Money – What the Money People Say And What It Really Means introducing his topic by noting:
There’s a huge gap between the people who understand money and economics and the rest of us. Some of the gap was created deliberately, with the use of secrecy and obfuscation; but more of it, I think, is to do with the fact that it was just easier this way, easier for both sides. The money people didn’t have to explain what they were up to, and got to write their own rules, and did very well out of the arrangement; and for the rest of us, the brilliant thing was, we never had to think about economics. (page xiv)
The details of modern money are often complicated, but the principles underlying those details aren’t (page xv)
“There was a fear that if it was made understandable, it wouldn’t seem important” Grayson Perry on art world terminology (page 5)
My theory is that the jargon was developed to mask really stupid concepts (usually benefiting the jargon-user in some way) that, were they to be explained honestly, would be laughed out of use.
For example, the California Institute for Local Government (CILG) offers a Guide to Pension Terminology where they seek to define some terms that I believe could have been defined better.
A few minutes ago a judge approved Detroit’s bankruptcy plan which included these benefit cuts that Detroit retirees approved back in July:
The Society of Actuaries commented officially on the Actuarial Standards Board’s (ASB) Exposure Draft on Public Pension Plan Funding and Accounting leading off with two obvious points:
- there is not typically an independent, third-party regulator governing the funding/solvency of public sector plans
- in the absence of a third-party regulator, there is a misperception that Actuarial Standards of Practice (ASOPs) are de facto regulation governing public sector plan funding
and summing up with:
we note that the role that actuaries in public plans play is difficult. However, they are the only advisors trained to understand the obligation these plans have taken on. If the actuary does not provide an unbiased measure of the obligation, and a complete assessment of the risk inherent in that obligation, who will?
Yes the actuary by training is best able to understand the obligation these plans have taken on but here’s the problem.