4 thoughts on “Forbes post, “Public Pension Funding And Reform— Or Lack Thereof — When We’re Not ‘All In This Together’”

  1. “risk-sharing: each year’s employee contribution (not just employer contribution) varies based on the requirements due to the funded status/funding method, and retirees’ benefits are adjusted up or down based on investment returns.”

    “They also consistently make the Actuarially Determined Contribution, year after year — which means, of course, that there is no need for more burdensome catch-up contributions later on.”

    There’s the rub. If one has been consistently contributing correctly for years, the risk is minimal. Wisconsin, perhaps, might need to reduce COLAs by one percent. And/or increase employee contributions by one or two percent. (Do you have any data on the actual changes in the last ten/twenty years?)

    New Jersey hasn’t had COLAs since 2011. They would need to increase contributions as much as 5-10 percent, for employers -and- workers. And/or cut wages by as much.

    Just not feasible.

    The “average” 70 percent funded state -might- be able to transition to risk sharing without too much shock to the system.

    The sooner, the better.

  2. Also, many states that are only 70 percent funded –have been– contributing 100 percent of their ARC (e.g.,California). It’s a simple fix, discount rate, but not an easy one.

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