Here's an interesting take on the looting of New Jersey's pension funds, and who is to blame. Despite all the past beneficiaries of current costs, the author blames the pension fund trustees — which is the equivalent of blaming the MTA's board for the MTA’s current financial problems. I'm not sure I agree. After all, who appoints the boards, trustees and actuaries, and what sort of people get the job? And what happened to the MTA when it tried to invest some money in the future? It was accused by all and sundry of having “hidden billions” that never existed, with every interest seeking to grab surpluses that also didn’t exist – the agency was going deeper into debt every year. I blame the Governors, particularly Pataki, and the legislators, particularly the leadership, for similar problems of past benefits and current and future pain in New York. And the interests that backed them and benefited from their deals and non-decisions. Appointing boards, trustees and actuaries doesn’t insulate government decision making from politics, it helps to insulate politics from accountability. Something to think about as alternatives to Mayoral control of the schools are debated.
This gentleman’s posts on the New Jersey pension situation are well worth reading. We should have someone like him examining New York’s pensions, and much else. But for those unwilling to follow the link, there are some key quotes.
“The New Jersey state pension plan is severely underfunded and you can blame plenty of people, though only one group would deserve it.”
“The state has been deferring contribution for years. Government workers have been demanding higher benefits (and getting them as in 2001) while balking at any reductions that would impact current members. Investment professionals have been searching for riskier vehicles even as the need for liquidity to pay retirees has grown. Taxpayers have been silent as they get the services but not the full tab.”
“But all these entities have excuses. Politicians want to keep taxes down. Workers and their unions want the most they can get on paper. The State Investment Council can only invest what they get. Taxpayers are too dumb to understand.”
“But there is one group that is responsible and their dereliction of duty has directly led to the looting of the state pension fund. These are the trustees for New Jersey’s four largest state plans. You may have never heard of them but these are the people ultimately responsible for keeping the state pension plan funded. Everybody else did their duty as they saw it. It was the trustees who failed.”
I think the politicians bear responsibility for their own actions. They represent the future, and they sold it out, in both states and throughout the nation. If people came to believe they were entitled to, and could get, something for nothing, it was because they were told what they wanted to hear — by those who were in fact delivering something for nothing to those that matter.
Nonetheless I agree that any New York pension actuary who went along with assertions that the pension enhancements of the past decade would be “free” should be fired. Before becoming eligible for a pension. That, however, would take a revolution in New York — or an election in those parts of the U.S. that still have them.