I’d like to tax pensions from government over $2000 a month at a 90% rate to make up for the crime of them ever getting them to begin with on the tax payer’s back. That’s just me though.
CalPERS? Isn’t that one of the outfits that likes to threaten companies who don’t do their bidding? My goodness, the scary attack dog turns out to be a chihuahua.
The very sobering aspect to this piece is that what we are reading here is endemic to the public employees systems everywhere.
Florida just started making teachers contribute a piddly amount yearly for the first time. My BIL’s commie wife is howling like a stuck pig. I say nothing. She is mathematically ignorant while she knows everything. Her sense of entitlement to the public breast knows no bounds. She told my wife she should complain to her employer for not getting 6 weeks paid vacation each year.
This is all going to come crashing down.
The real problem is not the expected earnings rate adjustment.
The real problem is the type of pensions in the Calpers supported pension plans, which are predominately defined benefit plans (employer “guarnatees” a formula driven defined annual/monthly benefit, “guaranteed” to be paid no matter what, no matter how the invested funds actually perform, no matter what happens in the economy, no matter what happens in the investment markets) - and the levels of those defined benefits are depending on that “expected” rate of return the administrators are hoping the funds will earn.
That differs from a defined contribution plan, where the employer guarantees to make a specific level of contribution monthly/annually, no matter what. A pension is then dereived at retitement from actuarial calculations that determine how much of a monthly/annual benefit can be funded from the balance in the employee’s pension account.
There are no jiggling of funds and scrapping up of “additional” funds for defined contribution pensions. They also do not promise what the economic times cannot reasonably deliver. They cannot be rigged by last minute overtime in the final years to get more out of some formula - defined benefit - based on final years’ earnings. The balance in the account is the balance in the account, period and the insurance company type actuarial formula for the alternative defined contribution plan operates the same regardless of the balance in the account.
Unions hate the defined contribution plans; they have no room for all sorts of special rules in a formula; rules they can fight for in negotiation with the employer. The only employer obligation under negotiation is the amount of contribution per employee that the employee will pay into each employee’s pension account. There is no future promised benefit to discuss. The performance of the funds and simple actuarial calculations will determine that at the time of retirement.
Instead of that, we get this spectacle with government pension plans every year; the taxpayers’ hired hands must either raise their taxes now, or raise their taxes later, to pay for the promises the hired hands made to the taxpayers’ employees.
They keep setting the rate above 7 percent while the acutal return on investments is much lower. Pass the buck and here comes the collapse.
The real number is more like 3%. Anything else is a fantasy.
Let’s see.. Billions of unpaid debt from cities and counties who can hardly keep up with current payments, a projected revenue return which is less than justified in the current economic climate, and a guaranteed makeup by cities and counties to fulfill any shortfall..
Yeah, this is just a recipe for financial disaster. And I still consider it to be gross embezzlement, as all these gold plated compensation plans were granted by fellow employees, not the people who are on the hook to pay.