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Old 03-25-2015, 05:37 PM
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campbell campbell is offline
Mary Pat Campbell
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 93,702
Blog Entries: 6

If you notice, most of the problems in this (and the five or whatever other threads) are not actuarial in nature.

It has been this way since the beginning, because I got into the argument re: public pensions because I heard "governments don't go out of business" and "the pensions will be made whole."

That's why we can have a bit of leeway on the public pension valuation assumptions, you see.

Everybody knows insurance companies can go out of business, so of course annuities have to be discounted at current, low interest rates; insurers must be penalized for holding too much risky assets in their General Account; insurers must hold 100% of what's promised (using conservative valuation assumptions), plus a little extra for safety. And should the cushion over 100% get too low, the insurer can be taken over, and the liabilities somewhat protected via the state guaranty funds.

But government doesn't go out of business, so we don't need that extra safety on public pensions. And besides, the taxpayers will always be there to make the pensions whole if it doesn't work out.

I thought that if I watched what happened over time we could see if this underlying philosophy held. Because I figured I was young (not even 35 when I started the first public pensions watch thread), I would most likely be around to see those assumptions sorely tested.

So here we are.

I knew there would likely be some bad behavior stuff popping up (asset side example: pay-for-play; on liability side, backDROP).

I'm throwing it all in.

I'm a big info junkie and I like keeping a record of news items that go by -- I find it much easier to search through the AO pension threads rather than searching through the entire internet for a story I vaguely remember.

Yes, I use the AO as my own personal cloud.
It's STUMP - meep on public finance, pensions, mortality, and more

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