Bad news for U.S. is good news for CalPERS, CalSTRS
The California Public Employees’ Retirement System has not had a good 2016. Its investment returns were microscopic, it faced sharp criticism from a prominent financial website for alleged unethical behavior and Gov. Jerry Brown had to intervene to prevent the nation’s largest pension fund from continuing to enable late-career pension spiking by public employees.
But year’s end brought good news of a morbid nature to CalPERS, the California State Teachers’ Retirement System and all agencies with actuarial responsibilities: It appears that U.S. life expectancy has plateaued after the nation previously seemed on track to eventually join Iceland and Japan as nations where it was common for people to reach their 90s.
This upward trend was blamed in San Francisco for the failure of pension reforms enacted in 2011 to provide much relief, as CalPERS reported last year, and has been one more factor in making long-term pension reform such a daunting test.
But after more than two decades of incremental but cumulatively significant increases in life expectancy, life expectancy went down slightly in 2015, according to the National Center for Health Statistics. There were increases in eight of the 10 leading causes of death, including heart disease, diabetics, drug overdoses, Alzheirmer’s, diabetes and suicide. Cancer was the only notable bright spot, with deaths down 1.7 percent.
U.S. life expectancy rose from 75.4 in 1993 to 78.9 in 2014 before dropping to 78.8 in 2015, according to the latest report.
The findings were in line with a report last year from Princeton economists that showed an increase in death rates among middle-aged whites, a development that was linked to the opioid epidemic and other self-destructive behavior.
CalPERS knocked for slowness in adjusting actuarial formulas
While social scientists and elected leaders ponder the implication of this development for the nation, it could provide a sense of relief at CalPERS. The pension fund has faced sharp criticism of “cooking the books” not just by having unrealistic expectations of earnings but by being slow to acknowledge its pensioners were living longer.
In early 2014, the Bay Area News Group’s Dan Borenstein wrote a column about CalPERS’ actuaries’ struggle to get the CalPERS board to adjust life expectancy forecasts. The actuaries got their way after grousing from some board members that this would increase costs for member agencies.
But Chief Actuary Alan Milligan remained worried that not enough was being done. In January 2015, CalPERS posted a mortality report that noted mortality had improved “a bit faster” than pension fund actuaries expected. It noted that CalPERS was now “predicting faster improvements than we had in the past.”
The prediction might still prove right. While most public-health experts agreed that the National Center for Health Statistics report was bad news, there were some who warned against an overreaction to the findings.
Slate published an analysis by Ben Hanowell, a data scientist who works for a company that connects the aging with assisted living. He warned against positing broad trends from one year of data and noted that some groups — such as middle-aged Hispanics and African Americans — continued to see their life expectancy increase.
As of June 30, CalPERS had 68 percent of funds for its anticipated obligations to public employee retirees — $139 billion less than needed.
2 commentsWrite a comment
Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.
Nov. 14, 2012 By Chris Reed Here’s how terrible California media coverage of AB 32 has been: Lots of people
Steven Greenhut: A funny video from our friends at the Orange County Register:
July 12, 2013 By Chris Reed San Diego Mayor Bob Filner responded Thursday to allegations that he sexually harassed several