What these comments ignor is that the will of San Diego voters has been thwarted. We took a long look at public sector pensions and the ominous trends for taxpayers and voted to rein in the excesses. Because of a technicality, the voters’ choice will now be delayed, or perhaps denied, depending on what the courts decide.
In presenting the mountain of data above, CA Renter criticizes taxpayer advocates for cherry-picking dates to make the pensions’ rate of return look bad, such as the 2000 – present ROR. He is correct that that is not a fair benchmark, since the Dow Jones Average is up only about 20% from that dot-com bubble year. But neither is it fair to pick the near doubling of the DJA from four years ago–an anomally that will not likely continue.
Along those lines, public sector unions usually pick the past 30 years of market performance to judge their expected future rates of return in their portfolio. But the Dow was at 800 in 1982 and is 14,000 now. As a result, they appear reasonable when projecting a 7.75% rate into the future. This keeps their members’ contribution share artifically low as well as that of current taxpayers, hiding the exploding future liability of taxpayers. This keeps current politicians happy, as they kick the can down the road.
But in the new normal of our economy, 7.75% is illusory and dishonest. No one should reasonable expect that now. Companies are rapidly revising downward their expected ROR’s and responsibly setting aside money to cover their future obligations. The public sector needs to face reality as well.
Private sector taxpayers work well into their sixties before they can retire and get a far smaller pension or social security check than the unionized public sector workers who tend to retire in their fifties. That’s why San Diego voters voted as they did.
