80% Pension Funding Hall of Shame, 2017Q3 Update
by meep
Party time!
Come on, guys…
ONE HERO
Short and sweet, from Greg David at Crain’s New York:
A good pension is fully funded at 100%.
A bad pension is also fully funded at 100%, but that’s okay. I’ll let the extraneous adjective slide.
Thanks, Simon.
AMBIGUITY REIGNS
These, I don’t know about. But it’s best to keep a record, in case I change my mind.
It would take years of double-digit returns to narrow CalPERS’ pension debt, now more than a quarter-trillion dollars, and reach the 80 percent funded level deemed to be minimally sufficient.
City council of Marysville, Michigan
Can the city of Marysville build a $1.5 million city hall, spend a quarter of million dollars on renovations at the recreation center and invest $400,000 to make four ball diamonds tournament-ready while raising the ratio of assets to liabilities to in city’s pension funds to 80 percent?
Baton Rouge retirement administrator Jeff Yates
The city-parish wants to raise the value of the trust from 53 percent total funding to at least 80 percent, which Yates said would put it in a healthy position to address benefits.
James Shuls, Show-Me Institute
Defenders of the teacher retirement pension will be quick to tell us the system is well-funded, by over 80 percent.
State law prohibits public retirement plans in Missouri from increasing benefits if the retirement plan has less than an 80 percent funding ratio — a number that measures assets against liabilities.
Editorial board, Commercial News
Experts like to see about 80 percent of the obligations funded.
Okay, that one is borderline, ish. At least they didn’t write “healthy”.
Simon’s impressed. I think.
THOSE WHO SHOULD HANG THEIR HEADS IN SHAME
One below is a repeat, in more than one meaning of the term. Yes, I’ve covered it before, but I’ve got a little story for it, and thought I may as well put it in.
The fund had only 30.3 percent of what it needs to meet its $7.6 million in obligations. Harper said the figure is much smaller than the agency would prefer, with pension funds ideally having at least 80 percent of their obligations fulfilled.
Arizona state representative Noel Campbell
Even with the additional payment, however, Campbell pointed out that Coconino County was still at about the 50-percent funded level — “well below the safe level of 80 percent.” He asked: “Do you foresee yourselves working your way out of this?”
Note: I am not related to that Campbell, except perhaps from waaaaay back in Scotland.
That’s better than Illinois’ 35 percent figure but still far short of the 80 percent level that’s considered relatively healthy.
Russell Grantham, Atlanta Journal Constitution
As a general rule of thumb, pension plans are considered adequately funded if their assets equal about 80 percent of their projected long-term retirement obligations.
Analysts typically cite a funded ratio of 80 percent as healthy.
That’s the repeat — go to the next section down to read my very short story about it.
Financial experts recommend funding of at least 80 percent to be fiscally sound.
The system is still not in the best of health. It is just 65.6 percent funded, far below the 80 percent level that some analysts consider healthy. It still also has $64.8 billion of unfunded liabilities.
Hilary Russ is also a repeat entrant.
Generally, pension plans are considered healthy at an 80 percent ratio.
But financial experts generally call pension plans healthy if they’re at least 80 percent funded. That’s because employees retire at different times, making a virtual ‘run on the bank’ unlikely.
UGH. Yeah, I’m not dealing with that crap right now.
Even with the increased contributions, the only way the city gets to 80 percent funded – a level considered stable — would be with a 7.7 percent annual return on its investment, pension experts said.
Paul Leger, Pittsburgh’s finance director
Pittsburgh has 60 percent of the money needed for $1.2 billion in pension obligations for current and future retirees, Leger said.
“This is really a major milestone to hit 60 (percent),” he said.
No it’s not. Just because it’s a nice round number and the prior round number hit was 50%, doesn’t make this a milestone at all.
Eric Schmitt, Treasurer of Missouri
Treasurer Eric Schmitt told the Legislature’s Committee on Public Retirement that the pension plan is underfunded by more than $5 billion. He cited an 80-percent funding mark as being healthy, although that would still leave the state below the amount needed to pay all the retirement benefits it potentially owes.
It’s estimated that Lower Pottsgrove will maintain a “safe” funded pension liability of roughly 80 percent, comparable to many of its municipal neighbors. Ninety percent or higher would be ideal, he agreed, but would cost taxpayers much more.
Ideal and safe mentioned. JEEZ.
Hang in there, Simon.
THE KEITH PHANEUF STORY
It’s not very long. So, in my last 80% funding hall of shame post, I awarded Keith Phaneuf a lifetime achievement award for making the list 8 times.
Then I went to the article and dropped the link and congratulated in the comments section of his article.
Somebody else commented on my comment.
Both were deleted.
I smiled.
CUMULATIVE STATS
Total Hall of Shame Entries since October 2014: 158
Ambiguous entries: 32
Heroes: 18
Never fully-funded list of evil: 2
Number of entries referencing “healthy”: 88 (from hall of shame) + 9 (from ambiguous list)
Number of entries referencing “ideal”: 7
BACKGROUND
For those confused about what I’m going on about here, please check out the following posts:
- On the 80% Pension Funding Hall of Shame
- On the 80% Funding Heroes List
- On the Never Fully-Funded List of Evil
- American Academy of Actuaries brief on the 80% public pension funding myth
The first three items are from me, and the last is from the American Academy of Actuaries. They’re the ones, back in 2012 with their first brief, who put me onto the whole 80% myth.
I just decided to be a little more pro-active (and public) in directly addressing those who use the myth. You can check out my spreadsheets where I keep track, and you’ll see that I often post comments on the articles where people offended.
Usually, they’re not deleted.
I appreciate that, Simon.
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