Yah, well--except that statement is made based on 'standards' which are surreal.
....public pension systems use a kind of accounting — smoke and mirrors by a number of economists’ estimates — that in part stipulates that benefit promises are to be discounted at an assumed return on pension assets.
There are some pretty lofty assumptions out there. Illinois’ public teachers’ pension, for instance, uses a return rate of 8.5 percent. There haven’t been a lot of 8.5 percent returns in these pension plans, significantly funded, or underfunded by riskier stock and hedge fund investments.
In fact, public pensions are only beginning to rebound from the investment bloodletting of the Great Recession.
Even the apparent best-funded plan in the country, which has stood by a more reasonable 7.2 percent rate of return, has repeatedly missed the mark.
The Wisconsin Retirement System returned 6.8 percent on its core fund during the past decade, and just 3.3 percent during the past five years — both of which are actuarial losses. The crash in 2008 wiped out $23.6 billion from WRS’ assets.
Missing the mark effectively means you’ve got to pump more money (taxpayer money, let's not forget) into the system or achieve higher – sometimes significantly higher – investments over the long haul.
The 'standard' which WRS (and others) use is like T-Ball, while private-sector pension funds use professional baseball hitters' rules.
Different article, same source on the matter...and you still don't get it.
Overcompensated? Depends which side you prefer to believe in. Biggs and his sidekick from the Heritage Foundation certainly have their own axe to grind, so their study, like the one I cite, will be debated.
Regarding the "accounting problem" (from the source you cited in your "Walker's Two Upcoming Battles" posting...
"If it seems like Biggs and Marchant are talking past each other, it’s because they appear to be. Biggs, and others, argue the discount rate should reflect future liabilities. Marchant argues the discount rate should reflect how assets are expected to perform.
Expectation, again, has been tricky business, lately.
“'That whole issue has been debated in our profession for quite some time and it’s still a matter of debate,” said Andy Peterson, a pension actuary at the Society of Actuaries. 'It’s not that one’s right and one’s wrong. It’s the PERSPECTIVE.'"
I think the non-partisan Pew Center would have made it specifically known, as well as other media outlets over the years, regarding the "sloppy accounting practices" with evidence, which the article significantly lacks to lend support to this assertion.
Perhaps Walker should focus on getting the cops and firefighter unions to pay into their retirement like every other public union. That is the real travesty.
Keep ignoring the "7% v. 3.5%" question if it makes you feel good.
Overcompensation is not questionable; it's fact. For apples-to-apples jobs, TOTAL COMPENSATION is way out of line. TOTAL COMP includes bennies--which are most of the problem.
We're perfectly willing to argue over how to remedy it, but you just cannot argue the facts, because the damn things are very stubborn, just like the fact that 7 is bigger than 3.
The 7% v. 3.5% question was addressed by the source that was cited. Please read carefully next time.
An 8% return is entirely reasonable these days. PE ratios are much more modest now then they were during the bubblicious years.
And if WRS could return 6.8% on it's core fund over the last decade, that was pretty good, considering the time period.
...and it's really sickening to read middle class Americans (assumption there) arguing over who's "overpaid" when the upper class has bought off Congress to enact laws which have shifted the productivity gains made by the working class up the food chain leaving us with no real wage growth over the past 30 years.
You guys are getting jammed and you're fighting each other over the scraps.
An 8% return is entirely reasonable these days. PE ratios are much more modest now
And if WRS' managers were fool enough to put all of the funds into common stock, they'd be jailed or at least fired with prejudice.
Nice try. But no cigar.
i agree with your view.and that has provided me a lot of worthwhile information.i am waiting for more updates on that....
I began employment with the State in 1964. At that time we were not allowed medical insurance or entry into the retirement program for the first six-months. At that time (And now) Milwaukee County's retirement plan was better that the state (Even without the more recent frauds).
For many years private industry had better pay and better pay. As I had married a widow with two children and had a son, I turned down some such jobs due to the security the State offered.
I did put 50% of my contributions (Before collective bargaining removed the need for such payments-in) into the stock-market based "variable annuity:", which has resulted in high earnings, but with some so-often and major reductions in my monthly payments.
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