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  #911  
Old 01-22-2018, 12:47 PM
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Mary Pat Campbell
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It's just a google doc that has my record of every time I grabbed someone using the 80% funding myth since October 2014.

This is my blog category:
http://stump.marypat.org/category/80-percent-funding/

and this is the 2017Q4 post:
http://stump.marypat.org/article/879...ercent-funders

and here's a graph:
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  #912  
Old 01-22-2018, 02:23 PM
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Looks like it is in decline. Are people reformed or are you less vigilant?
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Old 01-22-2018, 02:25 PM
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Mary Pat Campbell
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Quote:
Originally Posted by Masked Avenger View Post
Looks like it is in decline. Are people reformed or are you less vigilant?
I have a theory -- the bar is getting lowered to 60% or 70%.

My news alert is set up for 80%. I have had other people emailing items I had missed because of the moving of goalposts:
http://stump.marypat.org/article/867...new-80-percent

Spoiler:
I think you can see why the “80% is healthy!” goal mark is not very helpful for messaging right now… because most states aren’t there. Many more are in that “safe” 60% – 80% range… and there are too many that fall below even the 60%.

So I may need to reboot my Hall of Shame next year in light of the bogus 80% being replaced by an even-more bogus 60%.

But hey, y’all are Jonny-come-latelies. I already had noted goalpost-mover Dean Baker got ahead of the pack years ago:


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Old 01-22-2018, 05:49 PM
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Quote:
Originally Posted by twig93 View Post
A few gems from the second article:



When your funding ratio is in the low 30s, I'm not sure the level of precision in measuring it makes a whole heckuva lot of difference. Doesn't absolve the actuaries of their responsibilities, but at those funding levels, who cares? The fund is in serious serious trouble no matter what interest rate assumption you use.
[red]Time to increase the long term investment assumption to 15%[/red]
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Old 01-22-2018, 06:44 PM
Pension.Mathematics Pension.Mathematics is offline
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Pension actuaries now are specifically taught to not do these! a good article that is part of the exam syllybus:

https://www.actuary.org/files/PPPTF_...Report_c_0.pdf

I am not saying that Mr.Sharpe is completely innocent, but as an actuary that was trained many years before the standards were updated, he was likely following the status quo / the instructions of his clients (public employers).

In general, this is a case of competing interests resulting in future retirees getting screwed over:

-Current generation of tax payers (and active plan participants) want to make low contributions (human nature)

-Elected officials seek re-election by the tax payers, therefore they want to balance budget, especially in the short-term (i.e., they don't really care if the plan ends up terminated 20 years from now)

-The actuary (Mr.Sharpe) is likely indifferent, but would follow the status quo and use optimistic assumptions (such as outdated mortality) as instructed by his client, which happens to be public employers, who want both:
  1. Minimal conflict with elected officials, that is, they are okay with low contribution levels;
  2. Good pension benefits to attract and retain public employees, this increases pension liabilities and benefit payments.

-The above 2 items cause the health of the plan to deteriorate.

-As a result, future retirees suffer damage at the end when the plan finally collapses and is terminated.

P.S, none of this (including the adaptation of of financial economics) would have happened if the stock market never crashed, outdated mortality assumption was only a catalyst to poorly funded public pension plans.

Last edited by Pension.Mathematics; 01-22-2018 at 07:34 PM..
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