Published: Thursday, March 7 2013 12:00 a.m. MST
I agree. Thank you, Frugal Dougall. This audit was a much-needed insight into
the serious consequences of our assumptions.Dan Liljenquist's
statement, "The Legislature should enable URS to lower its return
assumptions by increasing pension contributions above what is currently
requested." carries a hidden assumption. He should have continued,
"then they could again offer defined benefit retirements to state
employees."He had assumed that lost benefits cannot, should not,
or will not ever be restored.
What is commendable about the audit and this article is that it's focusing
on funding future pension liabilites (debt) by setting aside more money now.What is funny about this recommendation, and most of this article, is
that anyone who knows anything about defined benefit pension plans and their
financial statements already knows that the assumed rate of return is a huge
guess / assumption. Kudos to UPR for using 7.5% in the first place, instead of
a higher rate. Will they actually achieve that rate of return over the next 30
years? If you know the answer to that question, then you're richer than
Warren Buffett.And John C.C. - defined benefit plans are dead. This
is the case for the whole nation. When they were originally offered, they were
affordable to companies / governments, and assumed that life spans would not
dramatically increase, and that the cost of medical care would not drastically
increase. How'd that work out? How many pension plan defaults have
occurred?I'm 38, and I would love to have a defined benefit
plan. However, not going to happen. So if you're older than I and lucky
enough to have one, enjoy.
I hope he is correct because my wife should be able to support in the manner to
which I wish to become accustomed.;)
URS made back the entire investment loss from 2008 back in just three years.
Sen. Liljenquist predicted it would take decades. Quibbling about whether 7.5%
or 7.0% is the right investment assumption is silly.
Seriously, this state has the best retirement system around. Now thanks to
Liljenquist, the public employees have no guaranteed retirement. Most public
employees (teachers, police, etc.) take the lower pay knowing that they will at
least be able to have livable retirement. Not any more. I am already seeing
almost no men going into teaching thanks to that little gaff. URS
is in great shape. In fact I predict that it will have MORE money than it needs
in the future. Not many are making it for 30 years as a teacher yet money is
being put into the system for those that were hired before 2011. What happens
to the retirement money put into the system when the teacher quits after 10
years? That is right, it stays in the system and the employee sees NONE of
it.Plus the legislature in their infinite wisdom removed the 70% cap
teachers could get if they worked for 35 years. Now the few that hang on can
actually work 40 years and get 80% in retirement. Nice move guys.Just leave the retirement fund along and go work on building more roads. It
seems that is what you do best.
So Dan, is what Cato says in his post true? Has the URS already made back the
money it lost in 2008? If so, when do you propose restoring the one benefit
left to public employees? Retirement was the only thing keeping many people in
those professions. Can someone admit when they are wrong?
The Utah Constitution says nothing about the auditor doing "preformance"
audits. It mentions only "financial" audits. There may not be a big
difference when a "performance" audit is of a program that involves only
money. But, it will make a big difference in many other contexts when a
"performance" audit is aimed a program that has little to do with
money.Audits are often used to target a manager or program someone
in power deems politically inappropriate, for whatever reason. Having the State
Auditor be the "overseer-in-chief" simply upsets the checks and balances
the Constitution intends between the different branches of government.
It's a bad idea. Utah citizens will likely regret the result.
No, the pension losses haven't been made up already. Not only have they not
been made up, but there's a high chance we still don't have enough
funds to cover the defined benefit promises we've made.Public
employees hired after 2011 have a 401k style plan that has a *much* higher
employer contribution rate than the private sector does. In fact, many if not
most private companies don't even offer any employer contributions any
more.As for not quibbling over small changes in growth rates,
I'd suggest going to a reputable retirement planning website and play with
those numbers. I know when I plan for my own retirement even small changes in
the rate of return make a big difference.
Cameron can you link me to some numbers supporting your claim? I ask because
everything I can find does indeed indicate the losses have already been made up
and the fund is very healthy.
Orem Parent, I can't put links in a comment. But last summer-ish this
newspaper reported the findings of two BYU economists who studied the fund and
found areas of concern.
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