Unfunded Pension Liability Study!

Anthony Pignataro:

This one comes to us from Perry Wong and I-Leng Shen at the Milken Institute in Santa Monica. Founded by convicted felon Michael Milken, the non-profit think tank seeks to “create a more democratic and efficient global economy,” whatever that may be.

Anyway, the study (click here for a pdf) is not for the faint of heart. The money graph is on Page 3:

“According to our crude projections, if no corrective actions are taken, the combined liability of the three major state pension funds will be more than 5.5 times as large as total state tax revenue around 2012-2013. Moreover, the combined liability per each working-age adult in California is projected to more than tripe from $3,000+ in 2009 to over $10,000 in 2014.”

Sigh. Pension liabilities will be five and half times tax revenue in about two years. Forget about saving something like CalWORKS — we’ll all be in federal receivership by that point anyway.

Not convinced? Click here for a pdf of the Stanford study that came out in April predicting that unfunded pension liabilities would cost the state nearly half a trillion dollars.

STILL not convinced? Click here and buy my bosses’ book Plunder! How public employee unions are raiding treasuries, Controlling our lives and bankrupting the nation.

Carry on.

OCT. 19, 2010

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  1. David
    David 19 October, 2010, 08:35

    Right — I don’t believe any of this. Anti-government activists always use the bottom of the trough of an economic recession to make wild predictions about the unsustainability of public programs and employment. But the economy always comes back, and things look very different when it does.

    The problem is not that public employees have pensions (which are very modest in the vast majority of cases), but that many private-sector employees do not. Everyone should be working together to build retirement security for everyone, not fighting to take it away from the people who have it. Meanwhile, the last 30 years have seen explosive growth in the share of wealth going to the top 1%.

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  2. John Small
    John Small 19 October, 2010, 13:42

    Mark & Rhah, (p6) give a very misleading account of world of actuarial interest. Legistators want a higher rate of return because it makes the short fall smaller, thus reduces bad political fallout like being voted out of office. For system managers, the higher rate forces managers to take high risks. This works in good times and not so well in bad times. Mark & Rhah point to historic average of 7.5%, which happened in good times, istead of taking both bad years and good.

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  3. Andrew Thornburg
    Andrew Thornburg 22 April, 2011, 14:59

    David’s comment (1.) needs to be framed in gold as the classic liberal response to facts, in this case 31 pages of facts, that contradict his beliefs. Of course he does not provide any facts to support his dismissal of the the study or, more importantly, back up his absurd propositition that all workers should get the same deal.

    Let’s make it simple for the Davids of this world. A California prison guard can retire at age 50 with 90% of his salary as retirement pay. He and his surviors will receive that payment for more than 30 years. David, that is like you hiring a plumber to fix your pipes this year for $100 and next year he socks you with a bill for $90 to fund his 401k.

    Wake up and smell the coffee – the unions have bought and paid for the politicians that have made these deals as payback for contributions to their election funds. One small example: Governor Brown, who recieved $2 million from the prision guard’s union for his election campaign, just approved unlimited carryforward of unused vaction and sick leave to the year of retirement when the retiree will recieve the highest hourly rate. In private industry these accounts are settled up each year and accounted for. There many are books devoted to exposing this self dealing by our elected officials. Read some of them.

    We are reaching that tipping point in our democracy where the ignorant produced by our failing school systems outnumber the informed voters who generally are paying the taxes that fund David’s vision of la la land.

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