Pensions Going Bust
Mish has put together a post showing the degree of problems for pension plans.
I think many pension plans were already under funded prior to the stock crash. Here's a summary:
San Diego's city pension seems to have lost about 20%.
Colorado PERA is down about 25%.
Illinois municipal pension down 21%.
Fresno county lost 1/3rd.
New York State down 20%.
Ick... Before black October the average state fund was down about 15%...
Lots of these funds have an expectation that taxpayers pick up the difference.
My thoughts... I haven't an much trust that there would be much a pension there for me by the time I get there and I am glad this crash has come much earlier then I expected.
The solution is to restructure pensions now to what could be sustainable, not ensure they completely crash.
Inflation builds completely insane beliefs. I've always looked at a pension in a today's dollars kind of idea. It is the only way they make sense to me. So, say people work an average of 40 years and they put 10% into pension and the employer even matches that 10%. Pensions need to pay out about 20 years. So, 2 working years pays one year of pension. (10 + 10) x 2 = 40% of pay, or 1% of pay for each year worked. Now pensions work and you don't see the stupid, stupid, stupid, did I say stupid, risk taking that happened with people trying to make something out of nothing.