CalPERS decides not to decrease the discount rate!

[Runner]

Originally Posted by Duffer

Insiders protecting their interest, gambling taxpayer money.

How can you be sure taxpayers would be better off if they increased the cost and started contributing more tax dollars into the fund?

[Locrian]

I'm certain taxpayers would be better off if they received a more honest opinion of what the true cost is and the difference between that and what they were contributing.

[Duffer]

Originally Posted by Runner

How can you be sure taxpayers would be better off if they increased the cost and started contributing more tax dollars into the fund?

Because I would not like to fund a statutory ponzi scheme. I would change my opinion if:

1. Benefits had to be funded as soon as they were earned. (Think fully insured plans.)
2. Calpers provided a real guarantee of benefits without trailing liability for underfunding. (Someone goes to jail if they made a promise that was false.)

[mr coffee]

Originally Posted by silverfox

Seems like keeping 7.75% was also one of their recommendations. They did nothing wrong.

I'd say they did something wrong when they looked to expected return on assets as the basis for discounting liabilities. And I don't think I'm the only one who would say this.

[Wigmeister General]

Originally Posted by Duffer

Because I would not like to fund a statutory ponzi scheme. I would change my opinion if:

1. Benefits had to be funded as soon as they were earned. (Think fully insured plans.)
2. Calpers provided a real guarantee of benefits without trailing liability for underfunding. (Someone goes to jail if they made a promise that was false.)

Under the CalPERS system, it's impossible to be fully funded. Highly compensated public employees can negotiate their final salary by jettisoning the benefits and increasing their final salary -- usually by 25%. Couple this with the pension benefit based on the highest year's salary ...

[campbell]

Originally Posted by Wigmeister General

Under the CalPERS system, it's impossible to be fully funded. Highly compensated public employees can negotiate their final salary by jettisoning the benefits and increasing their final salary -- usually by 25%. Couple this with the pension benefit based on the highest year's salary ...

...thus the conclusions of the Little Hoover Commission.

[JMO]

Originally Posted by Locrian

I'm certain taxpayers would be better off if they received a more honest opinion of what the true cost is and the difference between that and what they were contributing.

And, when it comes to long term funding, any reference to "taxpayers" is rather ambiguous. The real question is which generation of taxpayers will be stuck with the problem.

And, with any Ponzi scheme, sooner or later the source of suckers runs out and there will be losers. Some of whom (especially among the lower paid) will be innocent bystanders. It will be too late to recapture money that was already paid out.

[mr coffee]

Originally Posted by Duffer

Because I would not like to fund a statutory ponzi scheme. I would change my opinion if:

1. Benefits had to be funded as soon as they were earned. (Think fully insured plans.)
2. Calpers provided a real guarantee of benefits without trailing liability for underfunding. (Someone goes to jail if they made a promise that was false.)

me likey

[Runner]

Originally Posted by mr coffee

I'd say they did something wrong when they looked to expected return on assets as the basis for discounting liabilities. And I don't think I'm the only one who would say this.

You might not be the only one, but you would be in the minority. GASB is considering changing the way liabilities and expense is calculated for public plans, and the one thing they agree on is that expected return on assets should be used for discounting liabilities, provided assets, future contributions, and earnings are projected to fund the benefits.

[JMO]

Originally Posted by Runner

You might not be the only one, but you would be in the minority. GASB is considering changing the way liabilities and expense is calculated for public plans, and the one thing they agree on is that expected return on assets should be used for discounting liabilities, provided assets, future contributions, and earnings are projected to fund the benefits.

or maybe <sigh>

Now they will NEVER have to reduce the rate, not even by 1/4 of a percent. After all, the people using this approach all expect the return on assets to revert to the mean dream.