First, thanks to my referrers: the mysterious facebook and LinkedIn linkers, plus:
And before I get into my find…let me promote some public pension-related posts.
AROUND THE PUBLIC PENSION BLOGOSPHERE
First, John Bury has been doing rankings and analyses of public pensions. Take a look at his recent posts:
- State Pension Data
- State plan depletion ratios
- New Jersey pension data
- State with the worst depletion ratio
- State with worst funded ratio
- Better data – worse results
Bury shares his spreadsheets, which I’ve used in prior posts as well (and done my own poking around) – check it out!
At my prominent linker Wirepoints, Mark Glennon talks about how new accounting standards haven’t done much to make a clearer picture of public pension plan solvency.
The bottom line is that, if you think you can presume pension debt is more realistically reported under the new standards, you’ve been duped.
We’ve criticized actuaries on this site often, but it’s time to put the spotlight on accountants, too. The GASB standards are accounting standards. They show up not just in actuarial reports but also in financial statements for municipalities. In the actuary profession, at least there’s a reformist insurgency afoot and some reformers are making their criticisms public as best as they can. Some of the honest ones have written here on this site or answered my questions candidly when I need help writing on the subject. Many thanks to them.
Accountants hired by governmental units with pensions need to get on the reform train, too. Ultimately, their primary job is supposed to be producing financial statements that fairly present the financial condition of the governmental units they report on. They’re not doing it. Blame that profession for helping cover up a $5 trillion national financial crisis that’s gradually destroying hundreds of governments across the country.
I’ve talked with some people about how GASB standards are set, and the contrast with how FASB standards are set. FASB sets the GAAP (generally accepted accounting practices) for the U.S., and have a large professional staff. There are repercussions for crossing FASB standards, sometimes legal ones.
There have been some rumblings with respect to muni bond issuance and misleading accounting, but it’s been quiet for a while on that score.
In its defence, the AAA says it has in the past published similar views to those expressed in the report. And the SoA plans to hold a webinar on September 27th, in which the authors can discuss the issue. Still, the two bodies should just allow the report to be published. American public-sector pension deficits are more than $1 trillion, even on the most generous assumptions. This is an issue in which debate should not be stifled.
The link to the upcoming webcast is here: Financial Principles Applied to the Management of Public Pension Plans Webcast
Financial Principles Applied to the Management of Public Pension Plans Webcast
Competency (Learn more)
External Forces & Industry KnowledgeLeadershipTechnical Skills & Analytical Problem Solving
September 27, 2016
Social Insurance & Public Finance Section
Noon-1:30 p.m. ET
Several actuarial organizations have agreed that solvency, intergenerational equity and predictability/stability of contributions are key factors in funding policy. Public pension plans face challenges in all three areas. Actuarial and accounting practices address these challenges by smoothing methods that favor contribution stability over the other two factors. Financial principles, however, assign greater priority to solvency and intergenerational equity than to predictability/stability of contributions.
Presenters will show how basic financial building blocks applied to public pension plans imply practices that are very different from typical practices today, such as investment in liability matching, default-free securities, liability measurement based on the characteristics of the obligations and not on the assets supporting those obligations, funding that prioritizes solvency and financial reporting that is free of smoothing and deferred recognition.
U.S. Still Paying a Civil War Pension
A North Carolina woman is the daughter of a Civil War veteran, and still collects his benefits.
Irene Triplett – the 86-year-old daughter of a Civil War veteran – collects $73.13 each month from her father’s military pension. The identity of Triplett was first reported by The Wall Street Journal in 2014.
Pension costs are just now starting their inexorable rise — California just doubled spending on teacher pensions and they will double again and again — but the cause resides in deceptive public pension fund accounting that started long ago and continues to this day. The consequences for school children, college students and other citizens are on a par with the consequences for homeowners in 2008. Their futures have been — are being — devoured by the self-interested decisions of pension fund board members who, as Mayor Emanuel describes, refuse to exhibit honest leadership.
And now for the main event: a three-for-one deal!
TRIPLE PLAY IN 80 PERCENT FUNDING
The metaphor may not be ideal, but here we have one story providing three 80% funding myth-believers:
First up, the reporter Ryan Bentley of Petoskey News
Experts often point to a funded percentage of 80 percent or higher as healthy territory.
Oh, those frisky experts.
But still, pretty par for the course.
Next up, Petoskey city manager Rob Straebel:
Straebel said Petoskey officials consider 80 percent a reasonable benchmark for pension funding levels.
Finally, Charlevoix county clerk Cherie Browe:
We have always shot for 80 percent, she said. “We’ve been over 80 percent at different times. We’ve been under that percentage at other times.”
Wait, their target is 80?
All three. Same piece.
Here, have an award:
Enjoy your weekend, everybody!
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