This revelation is part of the misinformation campaign by public employee pension agencies. The agencies have lied to legislatures for years. Legislators on both sides have rubber stamped increases in pension benefits for years based on misinformation, a free lunch mentality, and heavy lobbying by public employees.
Underlying the misinformation is a fundamental lie by the public employee pension industry. The industry claims that public employee pension agencies can manage assets more efficiently than the private sector. Essentially, the industry claims that by mixing the investment portfolio of current workers and retirees, public employee pension funds can achieve higher returns. In the private sector, there are two porfolios, one for growth during employment years and a second to provide guaranteed retirement income. The second portfolio (managed by insurance companies providing lifetime annuity products) only purchases fixed income investments, primarily high grade corporate bonds.
In Colorado, the pension agency now uses a target investment return of 8 percent. The agency is unlikely to meet this goal for a number of reasons. Foremost, the portfolio must provide both growth for current workers and safety for retirees. Colorado like many states has a growing number of public employees retiring. The portfolio is trying to achieve an unlikely long term return with a growing body of retirees, many retiring in their 50s.
Another fundamental lie by the industry is misinformation about expected and guaranteed returns. An expected return has a host of assumptions. You can argue for almost any level of expected return. The point is not whether 8 percent is reasonable assumption. The point is responsibility if the expected return does not materialize. Any legislator who votes for benefits on the basis of an expected return has sentenced taxpayers as guarantors. The private sector will not guarantee expected returns. It is outrageous that any legislator (even a rat) would consider making taxpayers guarantors.
You are so right. In NJ the biggest bunch of liars are the PBA. Their union reps have claimed for years that the stress of being a cop reduces your life expectancy by at least 10 years. Or perhaps you have heard the yarn that cops commit suicide at much hire rates compared to the general population. The problem is is that there are no scientific studies that have ever been conducted that back up these claims. Cops and their union spew out this BS and the uninformed repeat it so often that it becomes reality regardless.
In the meantime most NJ cops retire in their mid 40’s after 25 years and start collecting 65% of the average of their final 3 years salaries’. Most cops in NJ earn well over 100k a year by that time. In addition to that they get gold plated health care benefits all paid for by the taxpayers. This madness has to end before the entire system implodes.
Governor Christie has indicated that once he gets done battling the education establishment that the police and firefighters unions will be next. Lets hope he follows through.