Pa. pension: Above average not enough; deficit rising
Pennsylvania State Employees' Retirement System finished 2011 with just 61% of the $40 billion-plus it would need to pay future retirees.
Pa. pension: Above average not enough; deficit rising
Joseph N. DiStefano
The Pennsylvania State Employees' Retirement System, close to "fully funded" in the early 2000s, is falling farther behind balancing its current assets with its expected future liabilities as it pays pensions to lawmakers, judges, state troopers, social workers and other public employees faster than payroll deductions, investment profits and tax revenues can fill the gap. SERS assets totalled $24.9 billion in market value at Dec. 31, down $1 billion during the year despite what SERS managers say was above-average performance by the highly-compensated buyout fund managers (Mitt Romney's rivals) who manage a large chunk of its total investments. That total is just 61% of the $40.6 billion in actuarial accrued liability SERS faced at Dec. 31. The ratio is down from 66% a year earlier. Taxpayers will make up the difference through bigger payments into the public pension system, unless investment values turn around fast.
The board, still chaired (after 20 years) by former State Rep. Nicholas J. Maiale and dominated by appointments of Gov. Corbett and his legislative allies, continues to invest in non-public investment funds in hopes they'll provide better profits than stocks and bonds. In December, for example, they invested $250 million with veteran hedge fund manager Julian Robertson's Tiger Management LLC.
pension reform badly needed in public sector. benefits too bloated to sustain. taxpayers cannot be expected to further subsidize extravagant benefits. elect people who have guts to tackle this dire problem.— jstash
How come all of the research showing that money management may have a few good years but over a 10 or 20 year period, nobody beats the market, hence the simplicity of the index fund with next to management fees other than cost to operate. All of the money should be there instead of in the hands of living legends, the smartest people in the room and the famous genius with a Nobel Prize who crashed Long Term Capital Management when his computer model went kerflooey. Pin striped patronage of the worst kind, playing with people lives, using other peoples money and skimming off the top before any distribution to the owners. Nice work if you can get. Let's hope living legends do better than MF Global.
