Pensions Odd Book-keeping

[Northwestie]

Interesting article in the NYT about the actuarial vs. market method of assessing pension liabilities.

http://www.nytimes.com/2016/09/18/business/dealbook/a-sour-surprise-for-public-pensions-two-sets-of-books.html?_r=0

On the heels of that - Oregon's debacle:  http://www.oregonlive.com/politics/index.ssf/2016/09/this_is_becoming_a_moral_issue.html


Bad enough that Rukaiyah Adams, the normally polished investment professional who is vice chair of the Oregon Investment Council, broke down in tears recently as she spoke of passing a record $22 billion in unfunded promises to future taxpayers

Another reason why I favor moving towards 401ks instead of the pension system.

[Papa Mustache]

Except I watched a friend struggle and continue working rather than retiring when the Great Recession hit. Her 401Ks tanked.

I think the only solution would be some sort of FDIC type backed pension system.

[Northwestie]

So -  because of bad planning we (the public) need to put up with this tax scam?  No thanks.

I just don't get how a public job somehow entitles folks to a pension when these have gone away for the folks who are paying for these pensions.  I know, they are not a lot - but multiplied by millions over decades it adds up.  Just about every state system is in debt - if you use the market analysis and not the rainbow unicorn method of calculating liabilities. 

[rosaz]

Except I watched a friend struggle and continue working rather than retiring when the Great Recession hit. Her 401Ks tanked.

I think the only solution would be some sort of FDIC type backed pension system.

I think it would be better to have the 401k's, just with maybe a bit more hand-holding - i.e. "retirement target 2040" accounts. People can sign up, and as they get to within a few years of their target date, stocks are gradually shifted towards bonds, or just straight cash. That way you don't have to risk selling when it's just tanked.

The problem with the pension method is that when the economy is bad, we, the taxpayers (who are also probably hurting in the middle of a depression - government tax revenue tends to drop substantially) are still on the hook for the same amount of cash. It just shifts the risk from retired public employees to taxpayers - and so many other services get cut to keep paying out the pensions.

[Northwestie]

And I would prefer that the small amount of capital for pensions just be given to the public employees for their investments.  Good idea - more education for folks on 401ks.  But the states have just proven horrible money managers and in the end they will have to do two things - 1) renege on promises they made to their employees and 2) raise taxes to cover some of the yawning budget hole.  It will not work out favorable for anyone.  Best to start cutting losses now and not make hollow promises and move to a 401k system.

[Metric Mouse]

UBI sounds better every day.

[Gin1984]

So -  because of bad planning we (the public) need to put up with this tax scam?  No thanks.

I just don't get how a public job somehow entitles folks to a pension when these have gone away for the folks who are paying for these pensions.  I know, they are not a lot - but multiplied by millions over decades it adds up.  Just about every state system is in debt - if you use the market analysis and not the rainbow unicorn method of calculating liabilities.

My mother worked for a private employer and has a pension.  The pension is run by the union, has multiple employers paying into it (and that rate is negotiated so they don't underpay) and is fully funded.  The issue is not that people have pensions, it is that employers are not funded them at rate they need to for the result they say they offer.  For example, California includes gains and losses into the amount they pay in each year instead of a flat.  That is just designed to screw up.

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[ender]

So -  because of bad planning we (the public) need to put up with this tax scam?  No thanks.

I just don't get how a public job somehow entitles folks to a pension when these have gone away for the folks who are paying for these pensions.  I know, they are not a lot - but multiplied by millions over decades it adds up.  Just about every state system is in debt - if you use the market analysis and not the rainbow unicorn method of calculating liabilities.

My mother worked for a private employer and has a pension.  The pension is run by the union, has multiple employers paying into it (and that rate is negotiated so they don't underpay) and is fully funded.  The issue is not that people have pensions, it is that employers are not funded them at rate they need to for the result they say they offer.  For example, California includes gains and losses into the amount they pay in each year instead of a flat.  That is just designed to screw up.

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My understanding is that private employers have a lot stricter funding requirements than governments do, too.

My prior employer also had a pension and it was actually slightly over funded when I left.