Skip to comments.Pension Expert: Local Pennsylvania Downgrades Lurk
Posted on 03/10/2014 2:45:04 PM PDT by ThethoughtsofGreg
With new accounting rules looming, states and municipalities are beginning to realize that their unfunded pension liabilities are much more severe than they had previously estimated. Defined-benefit pension plans, the standard for government employees, have wreaked havoc on state and local budgets for years. Unrealistic assumptions about the rate of return on pension investments is one cause for the plans regular underfunding, assuming an average uninterrupted 8 percent rate of return forever.
ALECs recent publication, Keeping the Promise: State Solutions for Government Pension Reform, provides an excellent blueprint for policymakers to understand the pension problem and offers concrete solutions on how it can be fixed. Pennsylvania is the most recent example of where this issue has again come to the forefront of debate. Paul Burton, of The Bond Buyer, examines below how new accounting rules could affect the keystone state.
(Excerpt) Read more at americanlegislator.org ...
It’s astonishing what a ponzi scheme gov. pensions are. Who, in their right mind, reasonably expects 8% a year returns indefinitely?
Pensions are one of the biggest killers for local municipalities in New York. My county’s pension bill for 4,200 employees is $100 million for the current year. This is insane and cannot continue. There are government workers in this state who retire with pensions in excess of $100K a year. Plus free medical for life. To think that I went into the private sector because the pay was better?
“Its astonishing what a ponzi scheme gov. pensions are. Who, in their right mind, reasonably expects 8% a year returns indefinitely?”
My state college pension fund (I am retired from a State University (UIC) in Illinois) had a return of 12.5 percent in 2013. Not all pension funds have lousy returns. Depends on how good those doing the investing are. Can’t complain about mine which has had consistently good returns for quite a few years now.
I wouldn’t be holding Illinois up as an example right now.
The S&P 500 was up 29.6% for that period.
I hope they aren’t paying too much for that performance.
I retired from the State of WI after 17 years with a pension of $550 a month in 2011. The average return of common stock since 1926 has been 10.5%. I will actually be getting my first increase in 2014 as WI (which is one of the best funded pensions in USA) uses a 5 year AVG of returns and the bad year of 2008 is out of the averaging.
Good, I’m glad to hear you’re doing well. Unfortunately, many pension plans don’t.