How will unfunded “pensions” affect the local economy?

[phaster]

[quote=CA renter]For one thing, many of us have been saying that some of the benefit formulas need to be reworked, putting them back to levels seen before pension benefits were boosted back in the late 90s.

Some of us have also advocated for pension funds (of all stripes) to get back into more conservative types of investments — govt bonds and very high quality debt, etc. — and to realign their return forecasts as a result. But this would only work if the Federal Reserve were mandated to stay out of interest rate manupulations except for very rare emergencies. Even then, their moves would have to be closely scrutinized and the pension funds (or a federal agency that oversees govt pension funds) should have some representation in the decision making process at the Fed.

If we want to change the way all financial entities calculate risks, the entire FIRE sector would implode.[/quote]

an economic implosion that harms finance, insurance as well as RE and other sectors of the economy is all but certain IMHO (the only question(s) are when will the TSHTF, to what magnitude will TSHTF how long will the global economy be screwed)

as I see things the stresses built up on the fault line of is too far gone to prevent an inevitable “economic/social” earthquake

starting from the beginning seems you don’t understand that the problem you seem to care about “inequality” is NOT a fed caused problem (WRT setting interest rates) but rather systemic in nature

they (the fed) are a one trick pony and separating out all the emotional baggage, the data tells me what is going on is just economic darwinism at work

the reason rich are rich is because they are very efficient at taking advantage of low interest rates and have access to investment vehicles that grow money (whereas the “poor” are NOT very efficient at taking advantage of low interest rates)

because you seem hung up on labels, perhaps you should watch this video clip of an economist of a liberal think tank that explains things:

http://america.aljazeera.com/watch/shows/Ali-Velshi-On-Target/2015/6/economist-says-the-federal-reserve-did-not-make-inequality-worse.html

from what I have seen, the root cause of the problem is corruption (and if somehow that was fixed then lots of other problems get resolved)

http://www.breitbart.com/big-government/2015/10/15/media-fail-americans-1-fear-is-government-corruption/

a few months ago a neighbor (who own a few properties in the neighborhood) and he shared that some in the neighborhood were trying to build support for local park

when I looked at the project calculated it was a hundred million dollar pork barrel project

basically like a corrupt corp that under-bids a project then charges cost over runs, seems estimated costs were much less than what seems to me as a common sense cost approach (but what do I know) FYI the project was being supported by RE interests and some local politicians (go figure)

http://1drv.ms/21In5ap

this is just another example of local corruption/self interest destroying the economy from w/in

ironically this past week there was a news video that was about a program trying to help homeless people in the area by requiring them to have one-on-one financial counseling (which seems to be a good start)

http://america.aljazeera.com/watch/shows/Ali-Velshi-On-Target/2015/11/middle-class-americans-forced-to-live-in-cars.html

I have to admit I didn’t really care or understand the nature of public pensions (till a few years ago), but as I see things it requires politicians to admit the system is corrupt and since they have an economic/political self-interest in hiding the truth there is very little hope to avoid a crisis of biblical proportion.

nothing will be fixed for a long time (if at all) for the simple reason in order to fix a problem, first one must admit that there is a problem and have the mental ability to understand the complex nature of the system.

one only has to read the newspaper to see that local politicians share economic traits much in common with corrupt companies/official like in the ENRON corp

http://www.voiceofsandiego.org/topics/politics/more-ties-revealed-between-dumanis-and-accused-campaign-moneyman/

http://www.sandiegouniontribune.com/news/2015/aug/04/azano-appeals-fbi-jurisdiction-campaign-finance/

recall officials at Enron ordered destruction of to evidence

http://abcnews.go.com/WNT/story?id=130518

its not too hard to find that same thing was ordered here in town

http://www.kpbs.org/news/2014/feb/28/san-diego-begin-deleting-all-city-emails-older-one/

given all this, have to wonder if the problem I inherited was somehow related (i.e. another symptom of government corruption)

engineers_report_2675_bway.pdf
https://onedrive.live.com/redir?resid=B4A61592A33514F4%21114

which it points to a much larger problem no-one wants to admit exists

tax evasion – motive and means.pdf
https://onedrive.live.com/redir?resid=b4a61592a33514f4%21110

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

actually the guy that helped me understand my sewer line issue told me stuff has been going on for years and over sights like a ex-council member who got a permit to build a garage (right on the property line, contrary to stated set-back rules which are clearly stated) in the neighborhood just after he was termed out and ran for higher office (years ago) is no different that what happened to me…

http://www.TinyURL.com/EnronByTheSea

government corruption is just like a fractal (because the pattern reappears over and over again, at different levels of government)

my own look at the data shows the system is corrupt and there is no economic incentive to admit there is anything wrong (which IMHO is going to play right into the hands of foreign powers that are playing the long “economic” warfare game against the USA)

http://www.cnbc.com/2015/11/30/china-could-see-2-3-trillion-inflows-after-yuan-enters-imfs-currency-basket.html

bottom line I can’t imagine foreign powers ignoring easy to exploit useful-idiots (as well as corrupt politician) who want to keep their unsustainable public pension (in play) as a diversionary tactic against the USA in the realm of geo-politics

[phaster]

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.

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

POLL What should happen with the 13th check?

http://www.sandiegouniontribune.com/polls/2013/nov/what-should-happen-13th-check/results/

this corrupt $hit for brains give away is well documented and eventually (perhaps soon) will come home to roost and destroy the economy…

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

[temeculaguy]

phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. 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. I’d imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

[bearishgurl]

[quote=temeculaguy]phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. 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. I’d imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

Thanks for the clarification, TG. You explained it better than I could. Yes, lifetime healthcare allowances were never guaranteed to “Tier A” SD County retirees (SDCERA members who retired or took deferred retirement since 3/31/02). I took deferred retirement prior to that date and thus am guaranteed a healthcare allowance (HIR) for life under “Tier I.” However, my pension was calculated on a much less generous formula than “Tier A” recipients, which was bargained for and in place at the time of my leaving county employ.

City (SD) MUST honor all DROP contracts they made with prospective retirees (SDCERS members) who agreed to work the required five more years for them (to prevent a mass exodus and “brain drain”). However, all of the affected SDCERS members should be fully “retired” by mid to late 2016. I know several who will finally be gone by June 2016.

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

Move on, folks …. there’s nothing to see here.

[Anonymous]

[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.

[phaster]

[quote=temeculaguy]phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. 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. I’d imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

so have any links to news reports/hard data about updated SD county pension management?

since this is an economics forum thought I’d try and understand what is going on locally (as well as what is happening nationally/internationally) using the intellectual tools I’ve picked up over the years

basically to try and make sense of the world around me I try relating stuff to concepts found w/in “Newtonian” physics which describes “cause and effect”

grouping all public pensions together is a way to incorporate the concept of a fractal (which is a math set concept that ties to model a natural phenomenon or something that exhibits a repeating pattern at every scale)

this technique of simplifying is standard practice in the study of physics where the goal is to try and understand what is happening to the system (in this case the “economy”) as a whole…

some might not understand or relate to the math/science framework I’ve presented, if so let’s examine the modern day economy using basic concepts found in scripture because that ancient document has a lot to say about effects of ethical decisions made by individuals/society using simple metaphor(s) like “sowing and reaping”

Galatians 6:7

Be not deceived; God is not mocked: a man reaps what he sows

Galatians 6:8

Those who live only to satisfy their own sinful nature will harvest decay and death from that sinful nature

suppose a rabbi, priest and imam go to a bar to discuss the topic, I’d bet they might agree that the implication from this passage is that when God says you will reap what you sow (s)he means you will live with the results of your actions (NOTE by including the “(s)” I’m trying to cover my ass and not offend the almighty, because I know the scientific method cannot determine the existence let alone the gender of God).

https://www.youtube.com/watch?v=kWjlkm5g-Tk

all theological joking aside, in an economy how well one does NOW depends upon the PAST decisions and acquired skill-set(s) of an individual or group

said another way, how an economy functions as a system, in the present/future reflects the care or lack thereof from inputs long ago!

so given various reports stating an ever growing problem w/ the viability of various public pensions (along w/ other alarming trends in the global environment) therefore I can only conclude there is eventually going to be some kind of armageddon that will manafest itself in the economic realm, so best to heed warnings

Revelations 16:15

Look, I come like a thief! Blessed is the one who stays awake and remains clothed, so as not to go naked and be shamefully exposed

Warren Buffett

Only when the tide goes out do you discover who’s been swimming naked

http://www.businessinsider.com/warren-buffett-warns-of-public-pension-crisis-2014-3

http://www.cnbc.com/2015/03/02/buffett-these-investments-are-a-fools-game.html

as to what keeps me awake at night, its a fear which is shared by many other americans AND that is that a righteous man cannot escape the collective ill effects of corrupt government which will have consequences as to the future “state” of USA (FYI by “state” I mean the economy as well as other condition(s): stable/unstable, prosperous/un-prosperous, admired/loathed, etc.)

[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.

http://www.voiceofsandiego.org/topics/government/ruling-could-mean-pension-pandemonium-for-san-diego-again/

[bearishgurl]

[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.

http://www.voiceofsandiego.org/topics/government/ruling-could-mean-pension-pandemonium-for-san-diego-again/
[/quote]

There IS nothing to see as far as the wishes and hopes of those claiming terms of CA gubment pensions already promised …. even decades ago, will change in any way, shape or form. Just ask the cities of Vallejo and San Bern, who have both filed for Chapter 9 BK protection in the past decade if they have gotten any relief from their already-promised pension benefits.

And I thank you for posting this link, XBoxBoy. I’ve downloaded it and what better time than the last night of 2015 to peruse this long-awaited ruling. I’ve got to step out at the moment but can’t wait to pour me a glass (or two, lol) and dive right into it. Yes, in Cali, the wheels of justice turn slowly … but alas, they DO turn, people.

I just have one preliminary comment. At first blush, the first page of the ruling is quite telling. The three labor-union charging parties in the ULP were repped by the very best, most experienced, influential and heaviest hitting labor lawyers in the state … if not the entire country. Don’t ask me how I know but suffice to say, I know this first-hand.

We’ve discussed this particular issues in the ruling here on the forum ad nauseam as it was actually taking place and before and during the time these landmark ULPs were filed. I’d have to dig to find the links but central to this issue (and righter than rain, despite his creepiness, which caused his ultimate downfall) was the infamous former SD City Councilman, SD Mayor and longtime member of the House of Representatives, Bob Filner.

Happy New Year, folks!

[paramount]

[quote=bearishgurl]
Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

[/quote]

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I’ve thrown in the hat – when my job dries up, I’m leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I’m living in poverty. Screw that….

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.

[bearishgurl]

I got sidetracked but am still studying the voluminous long-awaiting PERB decision on City unions ULPs to cause the effects of voter-approved Prop B to be nullified/repealed.

Here’s a (rather dated) background link I just found on the subject:

https://ballotpedia.org/San_Diego_Pension_Reform_Initiative,_Proposition_B_%28June_2012%29

And here’s a (rather entertaining) background thread I found on the subject :=)

http://piggington.com/ot_public_employee_unions_attack_the_city_of_san_diegoprop_b?page=1

I’ll be back in a few days (or less) when I’ve had a chance to finish and properly notate the entire Decision. I have to say that it is really great to at last see something of this magnitude take place in the golden state. It’s been a long haul, to say the least.

[paramount]

[quote=bearishgurl]

I’ll be back in a few days (or less) when I’ve had a chance to finish and properly notate the entire Decision. I have to say that it is really great to at last see something of this magnitude take place in the golden state. It’s been a long haul, to say the least.[/quote]

Don’t forget to look into the golden staplers the state has been buying for govt employees that cost hundreds.

When I get back to work next week I’m going to place an order for one and see what happens. I think I already know….

[FlyerInHi]

[quote=paramount][quote=bearishgurl]
Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

[/quote]

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I’ve thrown in the hat – when my job dries up, I’m leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I’m living in poverty. Screw that….

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.[/quote]

Voting with your feet is the best way. I already did although I’m still paying CA taxes on CA related income, and property taxes. I hate property taxes that I see no personal benefit from.

I don’t mind paying taxes. But taxes should be for services to citizens and the poor. Not golden pensions.

[phaster]

[quote=bearishgurl]
Thanks for the clarification, TG. You explained it better than I could. Yes, lifetime healthcare allowances were never guaranteed to “Tier A” SD County retirees (SDCERA members who retired or took deferred retirement since 3/31/02). I took deferred retirement prior to that date and thus am guaranteed a healthcare allowance (HIR) for life under “Tier I.” However, my pension was calculated on a much less generous formula than “Tier A” recipients, which was bargained for and in place at the time of my leaving county employ.

City (SD) MUST honor all DROP contracts they made with prospective retirees (SDCERS members) who agreed to work the required five more years for them (to prevent a mass exodus and “brain drain”). However, all of the affected SDCERS members should be fully “retired” by mid to late 2016. I know several who will finally be gone by June 2016.

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

Move on, folks …. there’s nothing to see here.[/quote]

huh…

first of all seems like Déjà vu (and perhaps a case of sour grapes?)

[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…

http://www.utsandiego.com/news/2014/aug/15/sdcera-pension-investment-strategy/

see also: http://sdcera.com/investments.htm%5B/quote%5D

then not too long after, it was reported

[quote=Wall Street Journal]
San Diego County Pension Chief to Resign

By Dan Fitzpatrick
March 19, 2015 6:22 p.m. ET

The chief executive of San Diego County’s pension system announced he would resign at the end of the month, bringing fresh turmoil for the $10.4 billion fund.

San Diego County Employees Retirement Association said in a statement that CEO Brian White and the board had “amicably agreed” that Mr. White’s tenure of nearly two decades would end March 30. David Wescoe, former head of the city of San Diego’s pension fund, will take over as CEO while the board searches for a permanent replacement.

A Sdcera spokesman said Mr. White made the decision to resign and that he and the board had been discussing the move “over the course of several months.” Mr. White said in a statement that “Sdcera has enjoyed great success, which I expect will continue” and that “serving as Sdcera’s CEO has been an incredibly rewarding professional experience.”

The exit of the system’s longtime leader caps a period of strife for a fund that manages money on behalf of more than 39,657 active and former public employees.

Board members and staff members spent much of the past year wrangling over an outside firm’s investment strategy that involved the use of derivatives to boost performance. The controversial approach was the subject of a front-page article in The Wall Street Journal.

The board voted in November to find a new internal investment chief rather than rely on an outside manager for that role.

Write to Dan Fitzpatrick at [email protected]

http://www.wsj.com/articles/san-diego-county-pension-chief-to-resign-1426803772

[/quote]

or could there be an ECONOMIC INCENTIVE as to why you want others to move along and not question the news article why “City pensioners get ’13th check’ bonus”

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

[quote=bearishgurl]
September 2, 2014 – 2:17pm.

Well, I’m representative of the typical local Suzy Q. Gubment-Pensioner with a fairly low income. But every time I look at listings the places I WOULD be interested in fleeing to (wine country and mtns, in and out of state), I’m finding the home prices to be just as much or higher than where I currently live … and utilities higher or much higher. And I don’t owe very much on my current home … relative to its value …. and could pay it off anytime I so choose to. And I have a running vehicle and know how to get on the interstate ….[/quote]

given this information the (re)action seems no different than that of a CEO of a tabacco company who has an economic incentive to keep the public in the dark about the public health costs/dangers of smoking as long as possible AND ethically is par for the course given what another pigg disclosed about typical local Gubment-Pensioner(s)

[quote=livinincali]
October 1, 2014 – 8:00am.

I worked on a project for RISK management about 12 years ago, which is the San Diego’s self funded disability insurance office. What firefighter and cops did at retirement was pretty bad. That was more a case of disability fraud, where if you retire under disability 50% of you pension income is tax free. But there were crazy things in the payroll system. People claiming to work more than 24 hours in a day. People claiming light duty (aka a disability claim) and regular duty in the same day.
[/quote]

seems everything also dovetails (WRT possible motives and belief in the existing faulty design of public pensions) which is outlined in the Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

in science the goal is to understand fundamental truths and the mindset is to examine the honest “cause and effect” (which is the intellectual/moral framework I try my best to operate in)

as I see things the scientific method is the most objective way to look at an issue since there is little or no regard to the calculus of economics or politics when looking for the “cause and effect”

more often than not when the human emotional calculus of economics vs politics are included, people cheat/lie/steal to obtain an objective (i.e. deluded themselves into believing in a corrupt $hit for brains game plan is viable/sustainable because the math is all but ignored along with understanding the context of the object designed)

it would be like VW telling their customers and regulators to just believe our ads because they state we produce clean burning diesel engines BUT ignore all the evidence to the contrary that there was a design flaw and cover up for many years till we were caught in a lie…

so if you or others care to check the dates of the articles, you stated others should ignore, note that the date I post a link to an article is right around the time I find it while skimming some news source (aka THE EFFECT), and the other link corresponds to what to me looks like (THE CAUSE) which might have happened years ago!

[phaster]

[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.

http://www.voiceofsandiego.org/topics/government/ruling-could-mean-pension-pandemonium-for-san-diego-again/%5B/quote%5D

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…

http://www.utsandiego.com/news/2014/aug/15/sdcera-pension-investment-strategy/

see also: http://sdcera.com/investments.htm%5B/quote%5D

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.

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

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)

http://www.wsj.com/articles/brown-unveils-largest-ever-california-budget-proposal-1420829069

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

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

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

http://www.hks.harvard.edu/centers/mrcbg/publications/fwp/2012-08

so anyone else see BIG problem(s) ahead or can outline a concrete a example of a larger potential economic headwind we as a nation face?

[quote=CA renter]
December 14, 2014 – 5:09pm

…but public pensions are just one part of the problem. They are dwarfed by other types of debt.[/quote]

[bearishgurl]

Uhh, phaster? You’re trolling now.

I don’t think you would be very happy as a current SD city or county “worker-bee” who is subject to mandatory payroll deductions of 7-14% of gross pay (depending on age) to fund their DB pensions. This doesn’t even take into account any mandatory payroll deductions they have for union dues and healthplans for any family members they are covering OR any voluntary payroll deductions they have in place to fund their 457 plans.

The average SD city/county “worker bee” (w/ 5-20 years service) currently makes just $15 – $25 hr.

Do you think YOU (phaster) could live comfortably in SD County on your net pay if YOU were a current employee in one of these systems??

Thankfully, I never had to find out as I had a high-earning spouse to help with living expenses while employed as a “civil servant” minion.

[Author]

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