Posted on 12/21/2008 4:30:56 AM PST by reaganaut1
The extent to which public pensions are underfunded has been obscured by governmental accounting rules, which allow pension liabilities to be discounted at expected rates of return on pension assets, according to NBER researchers Robert Novy-Marx and Joshua Rauh. In The Intergenerational Transfer of Public Pension Promises (NBER Working Paper No. 14343), they report that over the next 15 years, state pensions are expected to grow to a total of about $7.9 trillion. But Novy-Marx and Rauh conservatively estimate a 50 percent chance that the system will be underfunded by more than $750 billion at that time, and a 25 percent chance of a shortfall of at least $1.75 trillion (in 2005 dollars). Adjusting for risk, the true intergenerational transfer is substantially larger, they write. Insuring both taxpayers against funding deficits and plan participants against benefit reductions would cost almost $2 trillion today, even though governments portray state pensions as almost fully funded.
Novy-Marx and Rauh collected data on the largest defined benefit (DB) pension funds sponsored by U.S. state governments. In a typical DB pension plan, an employer pledges an annual pension payment of an amount that is a function of the employee's final salary and years of employment. To assemble the list of plans, the authors began with data from the Census of Governments published by the U.S. Census Bureau. They studied all plans with more than $1 billion of assets. There were 112 such plans at the end of 2005. They then examined the Comprehensive Annual Financial Report (CAFR) for each pension plan and collected total actuarial liabilities for each, along with the discount rate used by state actuaries to calculate these liabilities.
(Excerpt) Read more at nber.org ...
Many of those states have to balance state budgets by law. Instead of making tough economic and political decision to balance their own budgets, they look to US taxpayer to ease them off this burden.
I know a public school teacher who teaches in NYC (has 35 years in) who said he would actually have MORE money from his pension if he retired than he gets while still working. He loves what he does, so to him money is no object.
It is also interesting to note that most private companies have shifted their retirement plans from defined benefit (formula-based and employer-funded) to defined contribution (employee-controlled and -funded, with a tax incentive for employer matches). These plans, of which 401(k)'s are the dominant type, are more efficient and shift responsibility for retirement funding to the individual rather than the employing entity.
Government employers at all levels have resisted any such efforts at reform because of state and municipal union pressure and the politicians' endless appetite for more spending and vote-buying. Many of these underfunded/looted IOU's will soon come due, and the results will not be pretty.
By all the dope you can in Columbia. Fly it back and probably make a fortune . Statistics have shown that only 5% get caught . Better odds than the lottery .
You probably COULD have been a teacher and chose not to become one . Why blame someone for their choice of profession that you chose not to pursue? If you had become a teacher, you would not be venting over the pensions they receive .
The ONLY way to get less than in NJ if you are already retired is to change the State Constitution . That ain’t gonna happen .
“The ONLY way to get less than in NJ if you are already retired is to change the State Constitution . That ain’t gonna happen .”
I understand that - however, when the state doesn’t have the money, and can’t borrow it, and can’t get it from taxpayers, then the state will give pensioners IOU’s that will be backed by the full faith and credit of the state of NJ.
“Full Faith and Credit by the State Of NJ”
That’s a good one . Remember NJ TAXES pensions as income so if they default that means even less tax income . Then if there is no pension $$ there will be enormous defaults on mortgages as well as the loss of sales and sales tax from all the people who didn’t get paid . Its a Catch 22 situationwhich will only compound the problem .
Like I said ... I WILL make it up some other way, and it won't be as a greeter at Wally World either.
The way things are going there just may be a bounty on all elected officials ... soon.
Start running moonshine?
Kidnapping politicians seems to be looking like the way to go ... at the moment. ;)
Indeed, and the "unerfunded" social security ponzi scheme is right behind it
The correct headline: Public pensions are too high and must be cut
I clean houses in the nude. Make $400 per week. All in cash. Without this money, I would be unable to survive.
Someone has to say it: "A riot is an ungly thing... undt, I tink, that it is chust about time ve had vun." -- courtesy Inspector Kemp
Figures from a few years back, which by now will be greater, indicate that about 10% of the US economy is already off the books, ie, cash transactions. The government knows this, as it costs them over a hundred billion a year in federal taxes, and states lose millions in sales taxes. But I expect to see more and more local merchants and service people asking to be paid in cash.
Retire outside the United States. Get in ahead of the crowd, before all of the good countries fill up with disgruntled old Americans. ;)
Who would pay for a used NJ pol?
The market would be limited to next of kin and paid coat holders.(Maybe)
It could go bad if you grabbed O. Henry's Red Chief or very bad with a Bette Midler type from Ruthless People .
Best to leave this type of work to the pros south of the border.
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