STUMP » Articles » 80 Percent Pension Funding Hall of Shame: It Would Be Ideal to Pay the Pensions » 2 February 2015, 11:04

Anybody say Groundhog Day?

Just a reminder about the point of the 80 percent funding hall of shame:

Today, I have decided to keep track of every idiot who refers to this 80% funding level (or something even worse) as proof that a pension plan is or is not okay. Generally, reporters fall afoul of this, and this is not necessarily concerning. People don’t think of reporters, as a group, as expert in anything.

But when there are politicians directly making decisions about public pensions, union leaders arguing about their public pensions, and dear lord, public plan TRUSTEES putting this bilge forth, that is super dangerous.

But while reporters are not necessarily key in decision-making re: pensions, they are the ones who keep perpetuating this experts say talk, when said talk is dangerous for the plans themselves.

Today’s entries are not notable for originality or egregiousness – just the same old bilge.

Entry one from California:

A recent Watchdog column explained that the California Public Employees’ Retirement System as a whole reported a 77 percent funding level. That’s this close to what some pension experts say is the magic number for a solidly funded pension plan: 80 percent (though some think even that is too low, and CalPERS actuaries say the “ideal” but unnecessary level is 100 percent).

I was not able to track down the supposed actuaries who say that full funding is ideal but unnecessary. I got no responses to my emails about that.

Entry two:

Many pension experts consider an 80% funding level as adequate, though pension skeptics contend that it should be closer to 100%.

Oooh, I’m a pension skeptic!

What does that even mean?

Entry three:

The pension system’s funding status is a key measure of how it’s performing financially – and how much money it will require from state and local taxpayers in the years to come. In effect, the latest numbers mean CalPERS has 77 percent of the funds it needs to pay pension obligations over the long term. Many experts say an 80 percent funding level is tolerable, but 100 percent is ideal.

Again with the “ideal”.

Suppose you heard: experts say that paying your debts in full is ideal, but 80 percent is tolerable. You think the credit card companies would be happy with that? Banks?

Entry four:

The Maryland State Retirement and Pension System had only about 69 percent of the assets needed to pay for future and current retirees’ pensions in the last fiscal year — well below the at least 80 percent target that many experts consider healthy.

That’s the standard line.

I have an example from a book, thanks to Jim Palermo for marking it:

(with the second-highest top marginal rate), has a pension system with some $500 billion in liabilities that is less than 80 percent funded (the minimum percentage at which experts agree is fiscally sustainable),

Sorry that’s an excerpt, but I don’t have that book myself (yet). It’s called Government against Itself: Public Union Power and Its Consequences – it has several 4- and 5-star reviews, and it sounds intriguing. I’ll add it to my to-read list.

Thanks to Jim for pointing out the quote, and the book to me — if anybody else has more political-related books to recommend, especially with regards to pensions and entitlements, please email me at marypat.campbell@gmail.com.