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  #61  
Old 02-08-2012, 03:17 PM
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Arthur Kade Arthur Kade is offline
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It certainly does not make federal employees feel more secure about their annuities.
Given that it makes the probability of the money being there go up to > 0, it should.
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  #62  
Old 02-08-2012, 03:22 PM
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Originally Posted by Devil's Advocate View Post
I hate hate hate being in a DB plan now. I have zero idea if its a good deal or if I'll get anything in 30 years. At least with the DC I saw my balance and it was mine.
FYI, being in an active DB plan > being in a frozen DB plan > not being in a DB plan.

Odds of your not getting your current vested accrued benefit: Extremely low.
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  #63  
Old 02-09-2012, 07:09 PM
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Originally Posted by Devil's Advocate View Post
I hate hate hate being in a DB plan now. I have zero idea if its a good deal or if I'll get anything in 30 years. At least with the DC I saw my balance and it was mine.
I'm the opposite. I saw the funds in my 401k/IRA accounts drop 45%-55% during 2008. One fund lost 90% before they closed it and rolled the funds into something else. My DB (currently taken over by PBGC) payment will probably pay for a happy meal per month by the time I retire.
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  #64  
Old 02-09-2012, 08:04 PM
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FYI, being in an active DB plan > being in a frozen DB plan > not being in a DB plan.

Odds of your not getting your current vested accrued benefit: Extremely low.
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  #65  
Old 02-10-2012, 07:27 AM
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It's the actuary's fault!!!!!!

http://www.businessinsider.com/mike-...nt-fact-2012-2

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While he raised red flags among reactionary types as he always does, Mish, as he is called, forgot to point out that the cola agreement that occurred in the early 1990's was considered entirely reasonable by the actuary responsible for the solvency of the pension. I noticed that this little fact was entirely missing from Mish's article. That is irresponsible and set up to inflame the ill informed.

Truth of the matter is that the actuaries expected rosy 8.5 percent returns on the pension investments. That was not unlike most other pensions, though other pension funds are much more careful regarding the payouts of those benefits than what has occurred in many city pensions. No one is saying that this was not irresponsible looking back, but based upon the projections on earnings by the funds, it was not unreasonable at the time to make those predictions.

Yet by simply reducing the expected returns to 7.5 percent, the fund would have made great strides in maintaining a stronger position with smaller colas. The actuary would have saved a lot of grief by just backing off a bit in his rosy predictions.

Yes, MISH, how dare you ignore that the poor innumerate masses relied on the assurance of the freaky numbers guy that these COLAs were JUST FINE...except when, all of a sudden, they weren't.

How could they have known?

I'm so looking forward to the blame game re: POBs. "Hey, we borrowed at 6% and we assumed we'd make 8.5%! Sure thing! It was free money! .... Those damn actuaries!"
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  #66  
Old 02-10-2012, 08:37 AM
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Originally Posted by limabeanactuary View Post
It's the actuary's fault!!!!!!

http://www.businessinsider.com/mike-...nt-fact-2012-2

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Originally Posted by Article
No one is saying that this was not irresponsible looking back
I'll say it was irresponsible looking back. But that's because I have found no reason to think that humans can predict financial conditions (and most other conditions) even 5 years into the future, much less 20 and 30 years.
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  #67  
Old 02-10-2012, 05:25 PM
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Lima Bean, "Hey -- SOA or AAA? This would be a great time to make a call to Cullerton or his staff. Or just call the media. "

Don't wait for the SOA to educate. Send your own email. Include a link to this thread and its three prequels.
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  #68  
Old 02-10-2012, 05:50 PM
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Originally Posted by Spectrum View Post
Lima Bean, "Hey -- SOA or AAA? This would be a great time to make a call to Cullerton or his staff. Or just call the media. "

Don't wait for the SOA to educate. Send your own email. Include a link to this thread and its three prequels.
Fine.

Though it would be nice for a pension actuary to do it.
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  #69  
Old 02-10-2012, 06:54 PM
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Fine.

Though it would be nice for a pension actuary to do it.
I don't actually think he's too far off. Of course, if everyone retired the same day there could be a demographic loss on retirement that would make you less than 100% funded, but I'm not going to call and try to explain that.

Is there any reason why being 90% funded is good and being 80% funded is bad? Where is the line? I think that's his point. I'm not going to call him and tell him where the line is, because I don't know, and I am a pension actuary.
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  #70  
Old 02-10-2012, 07:21 PM
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I don't know all the details of this Rhode Island case but asking the actuary to consistently use a discount rate that is less than their expectation (which is constantly adjusted based on actual experience) is a sure way to end up with surplus assets. In that case the state's pension board would see excess assets and be more likely to allocate an exhorbitant COLA that wasn't actually justified. It would have just looked like it was justified because the state had been temporarily over-contributing due to an unnecessarily conservative discount rate assumption.
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