State Pension Problems Are Billions Worse Than Advertised

The Business Insider ^ | 12/26/2010 | Mike "Mish" Shedlock

[FromLori]

The Wall Street Journal reports New Jersey Pension Gap Hits $54 Billion. New Jersey’s pension gap grew to $53.9 billion in the last fiscal year, up from $45.8 billion, thanks to market losses and a lack of state funding, according to figures released Thursday.

Gov. Chris Christie’s administration said the gap, which reflected the state’s investment positions as of June 30, highlighted the need for proposed cuts to current public workers’ pensions. The $53.9 billion figure reflects the difference between the retirement benefits the state has promised to roughly 780,000 state and local workers over the next few decades and the amount on hand to pay those benefits.

In addition, an accounting practice called “smoothing” allows the state to factor market gains and losses over several years — meaning pension funds, on paper, are still feeling the effect of the 2008 market crash.

Christie, a Republican, wants to reverse a 9% pension bump workers received in 2001 under a Republican administration. Unions argue their members have an irrevocable right to benefits they have earned. The governor has challenged the unions to meet him in court. Actual Deficit Much Higher

There are at least two problems with that $54 billion number.

1. It allows smoothing 2. Plan assumptions expect average annual returns of 8.25%.

I highly doubt pensions return 8.25% total (let alone annual) over the next 5 years.

10-year treasury yields are a mere 3.4%. To get higher returns, requires higher risk. History shows how well that idea has worked out for the last 10 years. There is no reason to assume the next 10 years will be any different.

In fact, given stretched valuations and overly optimist earnings estimates, there is every reason to suspect the next 5 years will be worse.

[Mark was here]

They killed the Golden Goose. Too bad, no pension for these foks. Frankly I do not care.

[cripplecreek]

Jenny Granholm left a gift. She’s importing prison inmates from California with no way for California to pay for them. She’s doing it to keep union prison guards on the job.

To make matters worse our new “republican” governor seems to be letting Granholm help appoint people.

[EGPWS]

Christie, a Republican,...

That's something not seen very often, actually showing the political party of the official in an article.

[thirst4truth]

According to a report I saw recently on CA's state pension plans, the employees (the ones that work for us) have not contributed one dime to their funds. All pensions are 100% funded by taxpayer monies.

when Chris Christie said that the NJ teachers must contribute 1 and 1/2% to their funds out of their paychecks, what happened? They blew a gasket!!! We will see Greece happening in our streets because the union bastards don't get it. They think they are doing a great job with our children with educational rankings of 21st and 25th in the world in math and science!!!!

[SoConPubbie]

Here's the truth about the so-call "Conservative" Christie, the truth the Main-Stream media, and even conservative journalists/organizations are not printing:

• His budget passed only after three conservative Republicans were bullied into voting for it and the savings achieved in the budget were done at the expense of new taxes, new fees, federal Stimulus funds and accounting gimmicks; the 2% property tax cap will actually cause taxes to skyrocket; he has yet to propose the “across the board” tax cuts he promised as a candidate; the budget actually INCREASES state expenditures by 6% and the number of staff in the Governor’s office making $100,000 per year increases by ten;
• His confrontation with the unions is pure Kabuki theater with nothing accomplished but acrimony; he has yet to lay off a single state employee and his proposed 2011 state worker reduction plan is little more than window dressing;
• He has populated his cabinet with notorious liberals while firing the only true conservative - after slandering him;
• He has endorsed notorious RINO candidates in the 2010 mid-term election while avoiding (with one notable exception) contact with conservative candidates;
• He supports a multi-state Cap & Trade scheme known as the Regional Greenhouse Gas Initiative and is so committed to Cap & Trade that he used funds raised from RGGI’s carbon auctions to help balance the budget; he has directed that state funds be appropriated to subsidize “green” technology ventures such as off-shore windmills;
• He has refused to join other state attorneys-general in a joint lawsuit challenging the constitutionality of Obamacare while accepting federal funds for the implementation of a similar program on a statewide level;
• He is on record saying that he does not believe illegal aliens are here illegally; he has indicated that he supports amnesty for illegals; he generally favors strict gun control and he supports construction of the Ground Zero Mosque even as he condemns those who oppose it.

[cherry]

I know my sister is a good person and probably was a wonderful teacher for 30 yrs....and she was a math major....but I'd love to ask her just HOW she really thought the state could afford her retirement with a good pension PLUS medical for her and her spouse starting at age 55 or so?.....the goodies for her and many millions more?....

where's the math?....

people want to blame things on market "losses" to which I say BS....it was signing away on stupid contracts that were never reasonable nor sustainable...

[SoConPubbie]

Here's the details about the lack of conservatism on the part of Chris Christie, Governor of New Jersey:

Chris Christie: A Conservative Myth - Intro

Chris Christie: Budget Myths

Chris Christie: Unions and State Employees - The Real Truth

Chris Christie: Conservative Appointees or the Lack Thereof

Chris Christie: Political Endorsements - or Endorsing Extreme RINOs

Chris Christie: His Support of Cap & Trade and “Green Technology”

Chris Christie: Gov. Christie and Obamacare

Chris Christie: His Support of Illegal Aliens, Gun Control and the GZ Mosque

Chris Christie: A Conservative Myth Exposed

[FromLori]

There should be some kind of a standard a truth in labeling they have to meet in order to use the term Conservative or Republican clearly he is not a real Conservative.

[REPANDPROUDOFIT]

It's one thing to see the "average" government worker (teacher, clerk, postman, police, fire, etc) retire with a COMFORTABLE pension that allows them to have a safe retirement - i.e. move to Florida and live out life in a nice little retirement community with a small golf course and rec center.

It is entirely different to pay them a large enough pension to afford to keep their present home up north, buy a beach condo or home in Florida for the winter and search out the perfect vacation home in Tuscany or Provence!

Add to that the fact that they retire in their 50's with health benefits thrown in too and it is even more unsustainable!

[upchuck]

Very much related: Public Pension Cost Cover-Up? The Union Effort to Kill Transparency.

Are public employee pension plans "too big to fail"? My wallet and I hope not.

[ex-snook]

No wonder New Jersey is broke. Governors have diverted their obligation to the pension fund in 12 of the last 16 years. It’s just like the Federal government raiding the social security and then screaming that social security is running out of money.

[The Comedian]

Countdown to Poundstone rolling in here belching about how glad he is that he's a Federal retiree in 3...2...

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[USNBandit]

I thought the 1 1/2% was to their healthcare, which they also get for free.

[April Lexington]

We will see Greece happening in our streets because the union bastards don't get it.

Counter insurgency, anyone? Whacka thug. On a street corner near you! The mooches vs the payors. Wanna bet who wins?

[April Lexington]

Plan assumptions expect average annual returns of 8.25%.

Who came up with these numbers? Electronic spreadsheets. The linear lie!

[April Lexington]

where's the math?....

Who needs math when you have stupid and ignorant tax payers? Just pile on the pension goodies and fleece the morons. They are serfs anyway. They live to support the elite class. That is their job. That is their purpose. Just like slaves. Only... they can move from serfdom to serfdom...

[April Lexington]

move to Florida and live out life in a nice little retirement community with a small golf course and rec center.

...and pay no income tax...

[Lonely Are The Brave]

http://theeconomiccollapseblog.com/archives/municipal-bond-market-crash-2011-are-dozens-of-state-and-local-governments-about-to-default-on-their-debts

[SampleMan]

Here is the simple, simple rebuttal to CO2 driven warming.

1. The oceans give off CO2 as they warm and absorb CO2 as they cool.
2. The oceans are the principal well for all CO2.
3. IF CO2 was a significant driver of temperature, the Earth would drive to one extreme or the other (with the maximum amount of CO2 released or absorbed) and stay at that extreme with no way to get back. In fact, it would be impossible for the earth to stay at any equilibrium in the middle.