Another example of how misleading Don Thompson’s AP piece, Public retirement ages come under greater scrutiny, was: “With Americans increasingly likely to live well into their 80s, critics question whether paying lifetime pensions to retirees from age 55 or 60 is financially sustainable. An Associated Press survey earlier this year found the 50 states have a combined $690 billion in unfunded pension liabilities and $418 billion in retiree health care obligations.”
What Thompson doesn’t mention is that some states managed their pension funds better than others did.
A March 2011 report on the Best and Worst State Funded Pensions by Adam Corey Ross of The Fiscal Times offers a more balanced picture.
Ross writes, “State pension programs across the country have undergone a major transformation, as more and more of them are cutting back the amount of money they set aside for retired workers, gambling that they can meet their obligations through investments instead of savings…”
In fact, Ross lists the best fully-funded state pensions, which are: New York, Wisconsin, Delaware, North Carolina, Washington, South Dakota, Tennessee, Wyoming, Florida and Georgia. He also lists the worst state pensions where the gamble did not pay off.
California falls between the two lists and is struggling to fill the funding gap. The following video explains why.
In addition, nowhere does Ross or Thompson mention that California has two state pension plans. There is CalPERS and then there is CalSTRS.
The California State Teachers’ Retirement System [CalSTRS], with a portfolio valued at $148.2 billion as of October 31, 2011, is the largest teacher pension fund and second largest public pension fund in the United States. CalSTRS administers a hybrid retirement system, consisting of a traditional defined benefit, cash balance and defined contribution plan, as well as disability and survivor benefits. CalSTRS serves California’s 852,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.
How well funded is CalSTRS to meet its future obligations?
CalSTRS makes it clear that “It’s important to understand that the risk of facing depleted assets exists approximately 30 years from now versus actually facing insolvency today.”
Note: Due to losses from investments during the 2008 global financial crises, the CalSTRS retirement “fund took an enormous hit to its stock portfolio when the market plunged during the heart of the recession, losing nearly $43 billion — roughly 25 percent of its value — from June 2008 to June 2009.”
Continued on December 18, 2011 in The Private-Sector, Jealousy-Misery Media Factor – Part 4 or return to Part 2
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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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