Was just using a number. 15%, 2%, 20 %. Doesn’t matter. Effectively, the state is promising a certain return to its employees based on how much the employees pay to fund it and the amount they are promised. And, if that return isn’t met by the investors (which it wasn’t), it has to be made up by taxpayers. It’s a foolish thing to promise.[/quote]
Not exactly. The state doesn’t promise any return to it’s employees. It promises a certain series of payments to it’s retirees. It pre-funds these payments through a trust, and funding of the trust is based on certain actuarial assumptions. Funding is provided by a combination of payments from the state, payments from employees, and investment return. It is a sound model, one that has generally worked quite well for the last 70 years. But not one without risks. Current funding requires most current employees to cover about 55% of normal costs, while the state kicks in about 45% of normal costs. Unfunded liabilities are paid in by the state. So if the funds perform well, the state benefits.
