Actuaries got another rebuff this week when the labor-friendly CalPERS board voted to leave its earnings forecast unchanged, much like a CalSTRS board action in December that did not lower its forecast as far as actuaries recommended.
A lower earnings forecast raises pension costs for state and local governments struggling with budget cuts during a deep recession. But another rate increase also might fuel the drive for pension reforms that increase worker costs and cut their benefits.
“I was afraid we were going to throw gasoline on the fire in the public pension debate,” Neal Johnson of the Service Employees International Union told a CalPERS committee after a key vote.
Herein lies the main problem with public employee pensions: they are administered by politicians (who are influenced by union campaign contributions) and investment advisors (chosen, in part, by the parties that will collect the pensions) BUT the vast bulk of the funds contributed come from public coffers (ie, us, the taxpayer). If the calculations are all wrong, the pension beneficiaries don't care -- they have us to make up the shortfall.
The unions have very little skin in the game. And few people know this.
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