[quote=harvey][quote=temeculaguy]The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]
That is the trend, and I’m optimistic that common sense will ultimately prevail.
Defined benefit pensions are a financial experiment that failed, but the effects still linger.
The OP was asking how much damage is left to be done.
The question is still relevant.[/quote]
[quote=XBoxBoy][quote=bearishgurl]
Move on, folks …. there’s nothing to see here.[/quote]
Are you sure you didn’t speak too soon?
I have nothing intelligent to add to this back and forth on pensions, and no idea who is right, but I did notice an interesting article about how some (many?) of the changes are going to get reversed.
I don’t know what I was thinking not believing what politicians/lawyers said in a press release about the prudent management of a public pension fund, because those professions have always been known for being pillars of integrity and deep intellect
[quote=bearishgurl]
September 2, 2014 – 2:02pm.
Uh, well, I don’t think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):
…. For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.
At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches…
FWIW given the current release of The Big Short, its a great movie which I just saw and encourage all to watch because its entertaining and educational since it illustrates lots of relevant/esoteric info about economic effects people might not have ever pondered or understood the danger of
after you watch the movie consider thinking like Einstein who was fond of “Gedankenexperiment” (or though experiments) and looking at a problem w/ various frames of reference
[quote=Morpheus] This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes.
[/quote]
if you’ve decided to take the red pill, start off w/ the assumption that the all public pensions within the system (county and state level) are fully funded
[quote=temeculaguy]
December 29, 2015 – 10:18pm.
As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes.[/quote]
NOW lets the consider what would happen if we ONLY look at the city of SD and take things at face value (as was reported just before xmas)
City pensioners get ’13th check’ bonus
More than $6.1 million has been distributed to retired San Diego city employees in the form of a “13th check” — beyond their usual 12 monthly payments — making this year’s holiday bonus the largest such payout in the history of the three-decade-old practice.
But it’s become a source of conflict as the city’s pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.
since “The Big Short” is based on actual events, next lets say the CITY of SD issues bond(s) to cover the pension shortfall and not too long afterward some astute investors (from perhaps a soverign wealth fund w/ geo-political motives)
take out swaps on the bond(s) issued by the city [if you see the movie or have yet to see it, note the scene where the economist (Richard Thaler) and the singer (Selena Gomez) are playing black jack and explain to the movie audience, depending upon the tranche the payout ratio was 20:1 to 200:1 on a CDO]
what you should stop and think about is what happens if bond(s) of 2 billion to cover un-funded pension problem here in the city were to fail, which then triggers CDOs (for full face value)
the result would be an implosion of 40 to 400 billion dollars that hits the system (that someone would have to pay), AND THIS fallout IMHO would be enough to take down the rest of the hypothetical “debt free” state (which for comparison has an annual reported budget of around the $120 billion range)
In other words a big short (though experiment) based on an actual public pension problem ONLY in SD (aka enron by the sea), could be viewed as a economic cancer which would nuke an otherwise economically healthy state of california…
so BOTTOM LINE the ’13th check’ bonus, IMHO cannot be described as anything else than a corrupt $hit for brains idea, given a reported $2 billion shortfall (AND THAT IS EVEN BEFORE one should to ponder the economic dangers associated with “swaps” or other forms of economic warfare)
Though SDCERS investments were earning well above the 8 percent rate of return estimated by the system actuaries, under normal conditions investments surpluses are required to make up for below-average returns in other years to achieve the average rate of return. Therefore, unless the actuaries’ estimates are grossly incorrect, in the long run true “surplus earnings” are impossible. The use of surplus earnings for the purposes other than maintaining the pension system, such as to expand existing benefits should be viewed as a loan from the system THAT WILL REQUIRE REPAYMENT IN THE FUTURE.
The concept of surplus earnings is easily misunderstood, so sometimes these earnings are used inappropriately.
page 286
…like in the just reported BAU city of SD three-decade-old “holiday” practice???
Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie
what should scare the $hit out of anyone with any bit of common sense is that there is a nation wide problem with the mis-managed public pensions AND the reported two billion dollar problem w/ the city of SD public pension, is just the proverbial tip of the ice berg!
Underfunded Public Pensions
in the United States:
The Size of the Problem, the Obstacles to Reform and the Path Forward
