13 thoughts on “California’s Pension Bomb”

  2. I’d add Glenn’s mutterings on pensions to the bailout as well.

    Meaning:
    1) Total future conversion to “Defined Contributions” instead of “Defined Benefits”. Meaning “We’re putting $100 into your IRA today” instead of “You’re 10% vested in a promised-payout of $1000”.
    2) Stop allowing anyone to -promise- insane crap in the future.

    1. Indeed, a lions share of the pension problem is the mix of defined benefit with poor projections of costs / investment growth ,or “we’ll pay with future revenues”. So make it defined contribution with the contribution made in the current budget.

  3. From the linked story about CalPERS’ political activism:

    The Manhattan Institute’s Steven Malanga has described the history of California’s major public pension fund as “a three-decade-long transformation from a prudently managed steward of workers’ pensions into a highly politicized advocate for special interests.” The latest evidence: The fund—which faces unfunded liabilities north of $100 billion, and rising—recently announced that it would require companies it invests in to signal their concern for climate change by changing their board composition, even if it cuts into their bottom line. Governing magazine reports:

    In an effort to highlight the potential impacts of global warming, the nation’s largest public pension fund is asking corporations to include climate change experts on their governing boards.
    On Monday, the investment committee for California Public Employees’ Retirement System (CalPERS) voted to start requiring the corporations it invests in to include people on their boards who have expertise in climate change risk management strategies.

    It’s important to remember that CalPERS is investing with taxpayer money, and that it is taxpayers that will be on the hook if and when the size of the shortfall (created by a combination of incompetent investment and union capture of the state political system) becomes to large for the fund to bear. CalPERS’ latest political stunt, like the many that have come before it, foists more risk onto taxpayers—without their consent—for little reason other than to signal its own institutional virtue.

    What’s going on with present and future pensioners? I’m surprised there isn’t a massive protest over this huge frivolous mishandling of the pension fund (on top of the fraudulent projections of return). Instead, when I google for “protest calpers” (after filtering out CalPERS webpages), all I get is much more about CalPERS’ activism. Surely, there must be someone concerned about their present or future pension?

    1. If the pensions were defined contribution instead of defined benefit the pensioners would have a more direct interest in this mismanagement. And more interest in the economy as a whole within which the investments operate. But so long as they expect someone else to bail out the difference they can Blithely ignore it as someone else’s problem.

  4. Another reason to like Trump. How do you think he’ll respond to a request for bailout? “Go ask the U.N.”

    My ex is depending on that money! I guess I’d better become rich sooner?

    1. “Another reason to like Trump. How do you think he’ll respond to a request for bailout? “Go ask the U.N.” ”

      Unfortunately you have absolutely no idea if that will be his response or not.

      1. Who knows but if a bailout happened, who would be more likely to get reforms into the system to change it to a pay as you go contribution? The person rewarding cronies in exchange for kickbacks or the guy who has 401k’s for his staff?

      2. True, but think about the dynamic. People are going to expect Trump to perform in his supposed strong area of finance. His first cut at it will probably result in a budget shortfall because that’s what congress does. I suspect, to the degree possible he will be an axeman. His inclination is to eliminate entire departments (although reality has blunted that position.)

        So now he’s faced with a CA bailout. Something he can finally say no to without all the legal red tape of his other options. He’ll be on that so fast because it also works with his main issue, illegal aliens. “California is in the mess it’s in because they spend too much including on illegals. America will be great again because we are going to stop this on day one. That I can tell ya.”

  5. Barbara, you’re a logical woman. Not to offend, but that makes you exceedingly rare. (Did I say that out loud… boy am I in trouble.)

    It is my nature to do what I can for others. When that other was also at one time my wife even more so.

    Once, years after our divorce, I sent her $2000 to keep a house she had invested in only to see her lose it the next month. At the time, I was in bad shape myself, but she asked and I decided to try to help.

    When I love a person it is forever. I wouldn’t marry her again, but I still care about her and my stepson… who last year went through a divorce himself. If I can do something, why be so selfish not to? Especially if I can see and plan for the future when they can not?

    I don’t care so much about my own comfort. I have to really focus to do that. This next year I plan to, but not for myself… I’m fine with my life, but I want to be in a position to help others because that’s what’s always given me real satisfaction. I’ve even had bosses lecture me about being too nice to customers, but that was even better for the bosses (serious increase in future sales.)

  6. Meanwhile the average return on S&P index funds over that period is close to 5%. What on earth are they doing?

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