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Report has public pension short fall at $4.6 trillion

Discussion in 'The Okie Corral' started by Mr981, Jan 4, 2013.

  1. Mr981


    Dec 27, 2000
    N. Central OH

    Moody's has it at about $2 trillion; the report states that the average pension is 41% funded--Yipes!

    Apparently, one of the major culprits was the optimistic expected return on the pension fund investments--typically pegged at 8%. CALPERS earned just 1% in the past year indicating how far off even the major pension funds can be.

    Naturally, the tax payers will have to make up the difference.
  2. aircarver

    aircarver Ride Continues Silver Member

    Can nobody in government do math ? .....:frown:


  3. Glock20 10mm

    Glock20 10mm Use Linux!

    Sure! We just don't understand the math they are doing though.:faint:
  4. elsolo


    Aug 4, 2003
    pensions are a Ponzi scheme

    There are not sustainable, so the people that get in early enough get paid, everybody else is just a payer.
  5. jpa

    jpa CLM

    May 28, 2001
    Las Vegas NV
    NV PERS had a return for 2012 of 16%. Since 1984 they have a net return of 9.3%, also greater than the 8% expected. So does that mean I should get a refund of my contributions since they did better than their expected rate of return? If there was a shortfall you would expect that I would have to contribute more, right?

    The problem with a lot of pension plans (CALPERS included) is that the money wasn't put into the plan to be invested as required. Instead the lawmakers wrote an IOU and spent the money elsewhere. Since that money wasn't invested, there's no way for it to achieve the rate of return required to sustain the system.

    This kind of misappropriation committed by politicians across the country would land everyone involved in prison if it were done in private business. If the systems are underfunded and going broke it's because of mismanagement at the highest level, not because they're unsustainable.
  6. certifiedfunds

    certifiedfunds Tewwowist

    Apr 23, 2008
    CALPERS? Unpossible! Where's CACop?

    Here's a rough tip: If your employer is promising you a pension that is much better than the productive sector receives, or, is something the productive sector has had to abandon because it is unaffordable -- you might be in for a surprise.
  7. certifiedfunds

    certifiedfunds Tewwowist

    Apr 23, 2008
    The politicians spent your contributions or the taxpayers' contributions?

    If it is taxpayers contributions how is it misspent? Did they break the law?
  8. fastbolt


    Jun 9, 2002
    CA Central Coast
    Kind of depends upon the retirement system.

    The one I'm in only has more than 10K members.

    It's funded ratio is over 70%. It's been as high as almost 80%, and as low as the middle 60's.

    In 2009-10 it earned 14%.

    In 2010-11 it earned 24%.

    For 2011-12, when the recovery stalled, it went to essentially zero. For the first 3 months of 2012-13 fiscal year it rose to over 5%, and for the 12 months ending in Sep 2012 it had earned over 18%.

    I don't believe the fund can be "borrowed from", either. ;)

    Things fluctuate, but it appears that some retirement systems and funds can be managed well.

    I'm just lucky that I ended up in what's seemingly a good retirement system. This wasn't known to me as a young man, nor was I really thinking about it back then when I took the job.
    Last edited: Jan 4, 2013
  9. Bruce M

    Bruce M

    Jan 3, 2010
    S FL
    Florida's is 87% Or 101% in this report And has been well funded since 2000

    And the state has had retirement systems in place since 1945 for state and county employees and a system for state employees since 1927. Sort of a long time for a ponzi scheme to survive.

    That said I think it was Illinois that was funded at ~54% which seems to me to be a potential for a problem.
    Last edited: Jan 4, 2013
  10. janice6

    janice6 Silver Member

    Apr 4, 2006
    Hell, that's only one more tax by the feds to pay for those obligations that will be unfunded. The middle class has unlimited funds to shore up bad risks. Just ask any Congressman or Federal employee.
  11. jpa

    jpa CLM

    May 28, 2001
    Las Vegas NV
    It's misspent because the money was budgeted to be paid into the retirement system, not to be spent on operating expenses. Just like when a company budgets to build a new factory but instead gives a raise to the ceo. It isn't illegal to spend the money in that manner, but it doesn't negate the fact that the factory still needs to be built.
  12. dherloc

    dherloc X-Nuc

    Jan 26, 2009

    1% Incredible...imagine how much the fund managers are making on that money to make that 1%. Good thing they beat the market.
  13. certifiedfunds

    certifiedfunds Tewwowist

    Apr 23, 2008
    But didn't the lawmakers vote to spend it on something else?

    Should one group of lawmakers be bound by another group of lawmakers who are no longer in office?

    What if the taxpayers want their money spent elsewhere and direct their representatives to do it? Is that not their right to have their views represented?

    When a company's owners decide their money is better spent bonusing the CEO than building a new factory why are they wrong? It's their money.
    Last edited: Jan 4, 2013
  14. Damn the torpedoes! It's that fuzzy math!
  15. jpa

    jpa CLM

    May 28, 2001
    Las Vegas NV
    It's not the owners of the company making the decision but their elected board. You have no more direct influence over what our legislators decide to do with our tax money than I do. We trust them to honor the commitments that were made when they established the pension system. If they don't want to fund it properly, they should just disband the pension, refund everyone's contributions and call it good. Then we'll see the quality of employee the government can really attract.
  16. certifiedfunds

    certifiedfunds Tewwowist

    Apr 23, 2008
    In some cases the owners are the board. In every case, the owners appoint the board. In every case, the board has a fiduciary duty to the shareholders to make the best use of their money or they will find themselves on the losing end of litigation.

    Should the legislators be bound by the acts of a previous legislature that is no longer in office?

    You trust the government?:upeyes:

    What about the taxpayers that may not want their money going into a pension fund that was created decades ago by their parents? Who should they trust?

    So most government employees are in it for the pension gravy?

    Generally speaking, the government doesn't attract the best and brightest (to say the least). I guess what you're saying is that if you can't dangle a lucrative pension in front of them, it'll get worse?
  17. jpa

    jpa CLM

    May 28, 2001
    Las Vegas NV
    Yes, I understand in many cases the board is the owners of the business who have a direct stake in the success of the company but at the least are appointed by the ownership. In cases where they are not the owners, they have a fiduciary duty to the owners as you stated. However, they have no stake in the operation of the company and could do what they wanted as long as they were acting "in the best interests" of the company.

    I know you're intentionally being dense on this parallel I'm drawing because you refuse to admit that it's the same thing. Lawmakers have a fiduciary duty to be fiscally responsible when handling the taxpayers' money, wouldn't you agree? How is it fiscally responsible to knowingly incur debt and spend the money that was budgeted to pay that debt anyway? Just because they say "oh well, we spent your pension money" doesn't mean that the gov isn't still obligated to pay that pension. There have been court cases regarding that very issue. This is why changes to the pension system only apply to new members going forward, not to those already in the system. Because they would find themselves on the losing end of litigation.

    I trust the government as long as its' employees fear going to jail or its elected officials fear losing election. I believe the current legislators should honor the commitments made by prior legislators, otherwise disband the entire system and refund my contributions (and those of everyone else).
  18. 2bgop


    Dec 5, 2006
    In the SEC
    By their very definition they can not be, plus almost every state constitution clearly states this.
  19. CAcop


    Jul 21, 2002
    In other words see Stockton for what not to do with a city. They built stadiums and convention centers when nobody wants to go there. Trust me, I grew up there, if you find yourself on I-5 or 99 driving through Stockton, don't bother getting off the freeway unles you need gas or food. And if you get off dont get off any exit other than Ben Holt or Hammer.

    It's getting so bad in Stockton they are loosing so many officers they will have to pay the Feds back money they took for funding officer positions. The only people who apply can't meet the minimum standards.
    Last edited: Jan 4, 2013
  20. engineer151515


    Nov 3, 2003
    I haven't seen the US Senate pass a budget in 3 going on 4 years. And they are Constitutionally required to do so.

    So, no. There is no evidence that fiscal responsibility in handling the taxpayers' money is a requirement.
    Last edited: Jan 5, 2013