NYT
A FEW weeks ago, at the insistence of the Securities and Exchange Commission, New Jersey agreed never again to fraudulently hide its underfunding of the state’s public pension system. Meanwhile, in Albany, Harry Wilson, the Republican candidate for state comptroller, has asserted that — if you do the math the way any ordinary financial analyst or economist would — New York’s pension system is underfunded by tens of billions of dollars and that, as a result, the state is essentially insolvent.
These little tempests are likely to soon recur in many other states and cities nationwide, because so many governments have invested far too little money in their public pension funds. Retirement promises made to public employees represent a huge hidden liability for future taxpayers — helping ensure recurrent deficit crises for state and local governments.
The S.E.C. is now making inquiries about the underfunding of other public pensions, and its assertiveness is welcome. But this effort cannot ultimately fix the problem, because all the S.E.C. can do is force states to follow the budgeting rules that are set by the Governmental Accounting Standards Board. These rules offer, at best, only the illusion of transparency, because they allow governments to base their budgets on economic fictions.
Consider, for the sake of comparison, how private corporations, in measuring the value of the assets in their pension systems, are required to use real portfolio market prices. Government accounting standards, in contrast, allow public pension systems to measure their assets based on average values looking back over a period of years. In most instances those average values add up to a figure that is much higher than the amount of money the pension plan actually has.
(More here.)
You have read this article with the title How to Cheat a Retirement Fund. You can bookmark this page URL https://ogbcommunity.blogspot.com/2010/09/how-to-cheat-retirement-fund.html. Thanks!
No comment for "How to Cheat a Retirement Fund"
Post a Comment