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Why the Longest U.S. Bull Market Has Failed to Fix the Nation's Public Pension

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  • portlandia portlandia 
    Participant
    Status: Physician
    Posts: 400
    Joined: 07/07/2017

    Pensions were never designed for ppl to live this long.

    Click to expand…

    This is not the primary problem creating current pension under-funding.

    In 1984, life expectancy was 75 yrs, 35 years later its ~78. Even going back to the 1950’s, life expectancy was ~70. The problem isn’t that suddenly people are living “too long” and actuaries never accounted for this increase in life expectancy. This is a scapegoat used by politicians to deflect blame from where it rightly lies: at their feet. They promised, quid pro quo, greater pensions for more votes. The only politically advantageous way they could make these promises was by assuming unrealistic future returns. Those returns never materialized, so now we are in a mess of titanic proportions.

    #205589 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2849
    Joined: 09/18/2018

    @intensivecarebear,
    “I think that firm cutoff ages for govt monies for dialysis, power wheelchair, home health, surgery, and other costly heroic measures, etc would be a good start… but that’s just me.”

    Certainly this is the solution to pension plans? Your point is valid about diminishing returns. The question is at what point and what age as well as what do you call government monies. Pension got mixed in with healthcare due to people living longer. Census and mortality tables have been in existence for our country for a very long time. The data preexisted any “benefits” we’re implemented.
    What age do you suggest as a “firm cutoff”? Maybe I misunderstand, but would 65 work best? It would certainly solve a lot of problems. Social security, pensions, retirement benefits, with mandatory work until 65. Perfect! What age works best? Brings new mean to the phrase “work until you drop dead”.
    So your definition is age. Wonderful and very deep.
    Now tell me again why it’s in best you can come up with?
    Maybe I misunderstood. But that’s just me.

    #205604 Reply
    Avatar Tangler 
    Participant
    Status: Physician
    Posts: 345
    Joined: 08/23/2018

    Taxes! WCI is right! Almost no one saves enough! Taxes will go up. A wealth tax is coming. Politicians will never want to cut pensions or SS. Redistribution of wealth via wealth taxes. Promise voters anything, spend more, save less, plan unrealistically = our government

    #205612 Reply
    Liked by Craigy
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6066
    Joined: 01/12/2016
    Earnest refinancing bonus

    This assumed return is still too high and everyone knows it but nobody wants to deal with it, so the can will be kicked down the road and off the cliff at the end of the road.

    Source: http://publicplansdata.org/wp-content/uploads/2018/07/slp_60.pdf

     

     

    Click to expand…

    Its not that they dont know this or dont want to deal with it, for example calpers is trying to aggressively decrease their expected rate of return. The issue becomes an accounting and then government funding/deficit program. If you ratchet down the rate of return the underfunded liability increases and makes the program look very bad and puts the states at time under pressure (sometimes by law). So its an easy fix to simply have the rate higher to keep it in the “good” zone, but its simply financial engineering.

    Obviously they need to increase contributions and decrease benefits and stop recent pensioners from runs on the system that have killed some pensions. The rules are wild and the few that figure them out abuse them to every one elses detriment. I think the Dallas fire department one had this problem.

    #205629 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2849
    Joined: 09/18/2018

    Royalty, dictators, empires, and governments all are dependent on wealth redistribution.
    Pensions were a tool to solve a problem. Social security was a tool to solve a problem. It’s legal until it isn’t.

    Democracy (and permutations) is the only form of government that has avoided the mass use of force.
    Make no mistake, all is fair in love and war. As long as votes count, nothing is fair. Just change the rules.
    The “oppressed” rise up and win! Is robbing from the rich and giving to the poor legal? Just depends on your hopes and dreams. The sad part, deception has become acceptable in politics. Anything to win.

    No change. With power comes wealth.

    #205631 Reply
    Avatar notadoc 
    Participant
    Status: Other Professional
    Posts: 255
    Joined: 07/15/2016

    “I think the Dallas fire department one had this problem.”

    Yes it was Dallas.

    “More than $500 million in withdrawals over a few months prompted Mayor Mike Rawlings to sue the pension system.”

    https://www.dallasnews.com/news/dallas-city-hall/2017/01/30/new-federal-lawsuit-claims-pension-system-violated-constitution-lump-sum-withdrawal-policy

     

    Here is a bunch of articles on the Dallas mess.   Nothing like a guaranteed rate of 8% on your savings.

    https://interactives.dallasnews.com/2017/the-85th/issue/pensions/

     

     

    #205687 Reply
    Liked by portlandia

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