• Five Public Pension Systems Badly Underfunded

    by  • January 17, 2013 • News • 0 Comments

    TO THOSE CLOSE TO THE SCENE, A STATE REVIEW OF ITS FIVE PUBLIC PENSION SYSTEMS CONFIRMS WHAT’S ALREADY BEEN SAID: THEY’RE BADLY UNDERFUNDED, AND DELAYING DOESN’T HELP.

    AN AUDITOR GENERAL’S REPORT LOOKS AT THE STATUS OF THE TEACHERS’ RETIREMENT SYSTEM, THE STATE UNIVERSITIES RETIREMENT SYSTEM, THE STATE EMPLOYEES’ RETIREMENT SYSTEM, THE JUDGES’ RETIREMENT SYSTEM, AND THE GENERAL ASSEMBLY RETIREMENT SYSTEM.

    THE TOTAL UNDERFUNDED AMOUNT IS $94.6 BILLION WHEN CONSIDERING A “SMOOTHING” FORMULA; $96.8 BILLION WITHOUT THE SMOOTHING. THE SYSTEMS ARE FUNDED TO A TOTAL OF ABOUT 40 PERCENT.

    THREE OF THE FIVE SYSTEMS WERE FOUND TO BE OUT OF COMPLIANCE BECAUSE THEY HAD NOT PERFORMED INTERNAL AUDITS AS OFTEN AS THEY SHOULD HAVE.

    A DELAY IN HIRING SOMEONE TO DO IT IS BLAMED. THOSE SYSTEMS ARE THE STATE EMPLOYEES’ RETIREMENT SYSTEM, THE JUDGES’ RETIREMENT SYSTEM, AND THE GENERAL ASSEMBLY RETIREMENT SYSTEM.

    BOND RATING FIRMS ARE CONCERNED NOT ONLY ABOUT THE STATE’S FINANCIAL CONDITION BUT ALSO ABOUT THE POLITICAL PROCESS, ACCORDING TO THE STATE TREASURER.

    TREASURER DAN RUTHERFORD SAYS IT’S DAMAGING WHEN DEADLINE AFTER DEADLINE IS SET AND THEN NOT MET WHEN IT COMES TO RESTRUCTURING THE STATE’S PENSION SYSTEM.

    RUTHERFORD MADE REFERENCE TO SEVERAL DEADLINES FOR PENSION REFORM ESTABLISHED BY THE GOVERNOR – THE END OF THE 2012 LEGISLATIVE SESSION, A SPECIAL SESSION LAST SUMMER, LAST YEAR’S VETO SESSION AND THIS YEAR’S LAME DUCK SESSION – NONE OF WHICH WERE MET, AND SOME OF WHICH WERE FOLLOWED BY BOND RATING DOWNGRADES OR WARNINGS OF THIN ICE.

    RUTHERFORD SAYS THE STATE WILL NOT DEFAULT ON BONDS, BECAUSE DEBT SERVICE IS AT THE HEAD OF THE LINE VS. OTHER STATE EXPENSES, BUT HE SAYS HE BELIEVES THERE ARE INDIVIDUAL LAWMAKERS WHO DO NOT UNDERSTAND THE SERIOUSNESS OF THE $95 BILLION UNFUNDED PENSION LIABILITY.

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