WAKE UP: There's A 82% Chance That California's Public Pension System Will Run Out Of Money

Business Insider ^ | 12/18/2011 | Gus Lubin

[SeekAndFind]

California's pension system is living in a fantasy world where investment returns average 12.5% annually and there's enough money for everyone.

Unfortunately that's not going to happen. A big study from Stanford Professor Joe Nation along with California Common Sense analyzed the need for major cuts to CalPERS, CalSTRS and UCRP.

The largest union, CalPERS, has a 82% chance of a budget shortfall in the next 16 years.

More highlights via Eric Savitz at Forbes:

• The June funded ratio, which measures assets to liabilities. is only 74% for CalPERS even using a high-rate of return assumption for its investments. Assume a 6.2% return, and the funded ratio drops to 58%. On the same basis, the funded status is 60% for CalSTRS and 72% for UCRP.
• The total unfunded liability for all three systems is close to $300 billion at a 6.2% rate of return; assume a 7.75% return and the shortfall is still $142.6 billion, “or nearly $12,000 per California household.” Using a low-risk discount rate, and the total unfunded liability balloons to $498 billion.
• The reports contends it is “highly unlikely” the funds can invest their way out of the issue; to do that, CalPERS would have to average 12.5% a year for 16 years.

Every day California delays major reform — screw the legal obstacles — costs $3.4 million.

[SeekAndFind]

[Steely Tom]

Why don’t they put all switch all their money to Green technology investments like President Obama has? Their ROI will be off the charts in a few years.

[SeekAndFind]

RE: Their ROI will be off the charts in a few years.

Yes, off the charts NEGATIVE.

If it can happen to Solyndra and all other Green technologies in Europe (See Germany for instance: http://online.wsj.com/article/SB10001424052970204026804577100150091819074.html ), hey why not more??

[forgotten man]

If the leaders of the California public employee unions (the people who run California) had any brains they would kill the bullet train in order to save the money for their pensions.

[Dapper 26]

There is no thought of running out of money. The unions that run Kalifornia like a children’s piggy bank have spent too much money supporting Obama and progressive politicians. They will demand others pay when they run out of money. If the election results in 2012 reflect the same sentiment as the socialists in Kalifornia, they will NEVER run out of money.

[Yorlik803]

Why so Negavtive? there is a 18% chance it wont...

[morphing libertarian]

If the leaders of the California public employee unions (the people who run California) had any brains..............

82% chance they don’t.

[familyop]

Then California socialists will also run out of money and time for politics. That’s not bad.

[trapped_in_LA]

Not a problem, the pension funds can just load up on high yielding CA bonds that will help cover our deficit spending on things like the high speed rail to nowhere. I’m sure they’ll be paid back and no worries about a default .... Ha!

[SeekAndFind]

RE: Why so Negavtive? there is a 18% chance it wont...

Speaking of chances, this reminds me of this scene from the movie, DUMB AND DUMBER...

http://www.youtube.com/watch?v=fcGj57cQIeg&feature=related

[Vince Ferrer]

Two words, California pension funds: Greek Bonds.

Best return in the world right now. Of course, there is a little risk involved. However, as it stands, you're screwed. If you buy Greek bonds and they pay off, then you're in the clear. If not, well, you were screwed anyway.

[monkeyshine]

Oh this one is easy to fix! Let’s just tax each household $12,000 extra and make up the difference. We don’t want our public servants to have to suffer one year in retirement earning less than $150,000. They do so much for us.