WALTERS: Pension funds still face huge liabilities
Published: Tuesday, January 29, 2013 at 3:00 a.m.
Last Modified: Monday, January 28, 2013 at 6:39 p.m.
The California Public Employees’ Retirement System has reported
A steadfast investment strategy and a generally rising stock market are responsible for the recovery, CalPERS says.
The good news comes just a few months after Gov. Jerry Brown and the Legislature enacted a pension reform plan they say will shrink the long-term liabilities of CalPERS and local pension systems.
So the public pension crisis that was a political preoccupation over the last decade is history, right? Not quite.
The Legislature’s budget analyst, Mac Taylor, pointed out in his overview of Brown’s latest state budget that under Brown’s multiyear budget plan, the state
There is, moreover, some reason to believe that those debts are much bigger than the official numbers would indicate.
It also adjusts other accounting techniques that public funds use to minimize liabilities, such as spreading investment losses over many years.
The result of such changes, Moody’s says, is that the $766 billion in unfunded liabilities that U.S. pension funds claim triples to $2.2 trillion and if the firm adopts the proposed system for credit ratings, it will amp up pressure on those funds to get more money from taxpayers and/or employees.
That would imply that California, with about 12 percent of the nation’s population, could have an unfunded pension debt approaching $300 billion, plus another $100 billion for retiree health care. That’s big money in anyone’s book.
Dan Walters is a columnist for the Sacramento Bee.
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