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Reader says , “Ummm, those unfunded pension liabilities are based on some outrageous assumptions”

Phill Murphy -Sara Medina del Castillo

“Ummm, those unfunded pension liabilities are based on some outrageous assumptions:

1. The State Investment Council assumes an annual return of 7.5% on the NJ state pension assets; a 30 year US treasury (which matches a long term pension liability) currently yields 2.825%. Pew Charitable Trusts suggests 6.5% is a more conservative assumption, which would increase the unfunded liability by 28% versus the current assumption assuming 7.5% annualized returns…

2. The actual unfunded liability is much larger than advertised, as highlighted in the GASB accounting differences highlighted every time NJ sells state debt. See FASB #158 if you care. Basically, under the new GASB standards, pension assets are reported using actual market values rather than the traditional calculations that smoothed gains and losses over time. As a result, continued volatility in reported annual funding levels is likely.

3. The actuarial assumption for life expectancy haven’t been updated yet for the new mortality projections (Society of Actuaries now says the average 65-year-old American man will live to 86, while the average 65-year-old woman will live to age 88). The pension plans assume shorter lifespans (early 80s) which means they haven’t accounted for people living longer and drawing their pensions for more years than they actually served!!! The actuarial math doesn’t work.

4. NJ public sector employees are only contributing $7bn a year towards their own defined benefit pensions versus $12bn in pension checks sent annually to retired NJ public sector workers. That $5bn gap is covered by investment performance and contributions from the state (current record $3.2bn contribution is 9% of the state’s 2018 budget), which means after debt servicing and mandated expenditures, there are less and less funds available for everything else in the state like schools, state universities, infrastructure, rail transit and highways, parks, hospitals, etc.

5. Why should any 52 year old, which is the average age of PFRS retirees after 25 years of service, be allowed to retire on a full pension? Make them wait until age 65 until they start collecting their pensions, move new hires and those with 5 years or less of tenure to defined contribution pension schemes, with lower cost health insurance coverage than the current platinum care which is far better than any plan offered in the private sector… why should private sector taxpayers subsidize better healthcare coverage than they get through their employment for public sector employees? It makes no sense.”

10 thoughts on “Reader says , “Ummm, those unfunded pension liabilities are based on some outrageous assumptions”

  1. You missed the largest “smoke & mirrors” assumption of all.
    Contribution of the lottery system to the pension fund for 30 years.

  2. Abject greed

  3. Oh it does. You need to learn crypt .

  4. Waaa, Waaaa, There he is Boss Hog 🐷 Kime crying about what others have. His envy and greed drive his quest to take away what others have earned and deserve.

  5. Everyone should be required to wait till 65/66 to collect lifetime pension. Retire when you can but you must wait like everyone else.

    How would an age 65 payout affect these numbers. I know many who have retired in their early 50’s with a full pension. Draining the system

  6. Union obstinance and greed are literally putting the state out of business. There have been several very reasonable proposals floated to maintain payouts while not bankrupting the system. The unions don’t seem interested in any of them. They whole thing is a house of cards – the longer we wait, the uglier the end will be.

  7. Hwy Boss Hog 🐷 Kime

    Ha Ha Ha you Mr Hog 🐷 don’t get to decide who earns what, or what their retirement benefits will be, you are a nobody. All you get to do is pay for it.

    Your envy and greed Is causing you to sound like a moron. Police and firefighters will continue to receive the benefits they have worked for and earned and there isn’t one thing you can do about it.

    So go ahead and keep 😢 crying and 😭 crying about police and firefighters pension and benefits. I am enjoying your mindless rants and stupid raves all while I receive the pension and medical benefits I earned and you can’t take away.

    Have a good day Boss Hog. 🐷🐷🐷

  8. Actually the payout could be much longer than noted by prior posters. If a retiree has a younger wife and he croaks the pension could continue much longer until she croaks. So the years of payout can easily exceed the years of employment.
    When men get divorced and remarried they tend to choose a younger bride th second or third time. The prior wives get a piece of his pension if theyhad typical settlements but the pension portion earns with the new wife, along with the husbands share of th original amount (after deducting for wifey 1 share ) will continue for many years
    My friends first wife got 52% of his pension, but if he gets remarried to a young wife she would get the remaining 48%(his share) until she croaks..
    Question….how do medical benefits get split up for the ex wife and new wife? Are taxpayers on the hook for both? (3 People?)

  9. Meanwhile, the grass is not being cut at the parks and that guy is going to get a pension for his “work”.

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