America’s slow-motion public pension train-wreck (by some estimates, the shortfall currently exceeds $3 trillion) has been kept in motion for years by deeply dishonest accounting practices employed by state and local governments, which presume unrealistically that pension funds can consistently earn white-hot annual returns approaching eight percent. So it’s disappointing, but not particularly surprising, that the actuarial establishment moved to suppress a report pointing this out.
Pensions and Investments reports:
The American Academy of Actuaries and the Society of Actuaries Monday abruptly disbanded its longtime joint Pension Finance Task Force, objecting to a task force paper challenging the standard actuarial practice of valuing public pension plan liabilities.
“This paper (is) being censored by the AAA” and SOA, said Edward Bartholomew, who was a member of the former task force, in an interview. “They didn’t want it to get out.”
Others who were members of the task force also said in interviews the two actuarial groups are trying to suppress publication of the paper.
There are powerful interests that don’t want public pensions to be governed by the same kinds of accounting principles used in the private sector because… well, because if they were, public pensions would go from seriously underfunded to catastrophically underfunded.
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3 comments:
It's a simple kind of complicated.
1) Did the plan save enough money?
2) Are actual investment returns in line with estimates and assumptions? If not, what is the shortfall?
3) When will they retire, how much are they due, when will they die?
4) Point 3 won't vary much. If we're going to be short will have to finagle with some combination of #1 and #2.
Oversimplified but accurate.
This WHOLE country is nothing more than one big PONZIE scheme
The problem is fraud.
The accounting shenanigans are played out to cover up the fraud.
The government / corporation made promises that it could not keep.
It committed fraud.
Now it is committing more fraud to cover up the original fraud.
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