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Pensions the Nature of the Lie II

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Last November I wrote a post called “Pensions The Nature of the Lie.”  The post described the way politicians have used the double counting of asset price bubbles and historically average rate of returns to justify retroactive pension increases for politically powerful public employee unions, and cuts in taxpayer pension funding to shift money to other interests. With the bill shifted to the less powerful, less well off others when the bubbles inevitably deflate. In the post I predicted that if the most recent asset price bubble, driven by the sub-zero interest rate policy of the Federal Reserve, did not deflate by the end of the fiscal year, the new local liar in chief City Comptroller Scott Stringer would announce how great things are based on market values. And if it did deflate, he would claim that things were still fine based on actuarial values, which do not account for short-term market moves in either direction until years later.

The bubble has not yet deflated. According to one widely accepted set of measures, it is now the third biggest bubble in history.  According to another, it is the second biggest bubble in history.  And right on cue, Stringer announced “New York City's pension funds ended the latest fiscal year with a record-high value of $160.5 billion…The funds, which he oversees, got a 17.4% investment return for fiscal year 2014, which ended June 30. Mr. Stringer said that was one of the strongest years for the pension funds in recent times, and the annualized rate of return for the most recent five-year period is 13.4%.”  Additional commentary follows after the break.

Update: New York City Police and Firefighter Pensions

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On December 20th of 2013, I published a post based on long term Census Bureau public employee pension data for the New York Police Pension Fund Article 2, the New York City Fire Department Article 1B Pension Fund, and the police and fire pension fund for New Jersey. Among its findings: the share of former NYC police officers and firefighters who were retired with disability pensions was far higher than the share for New Jersey or most other pension funds around the country with “police” or “fire” in their names. On January 7th, 2014 federal prosecutors announced “the largest fraud ever perpetrated against the Social Security disability system, a scheme stretching back to 1988 in which as many as 1,000 people — many of them officers and firefighters already collecting pensions from the city — were suspected to have bilked the federal government out of an estimated $400 million.”

Last years’ post also showed that the New York Police Pension Fund Article 2, the New York City Fire Department Article 1B Pension Fund, and the New Jersey Police and Firemen's Retirement System are deep in the hole – despite sky-high taxpayer contributions in the case of the New York City funds, contributions that drain money from other priorities. As for the other pension funds in New York and New Jersey, I have updated most of the charts with one more year of data. These charts and commentary follow on “Saying the Unsaid in New York.”

Updated Long Term Pension Data for New York And New Jersey: The Large Plans for Most Public Employees

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New York City and New Jersey, like most places, have separate pension plans for teachers, police officers, and firefighter, and large plans for everyone else. This post is about updated Census Bureau data, for the years 1957 to 2012, for the New York City Employees Retirement System (NYCERS), which also covers New York City transit workers, the New York (state) Public Employees Pension and Retirement System, which also covers local government workers (including police officers and firefighters) in the rest of New York State, and the New Jersey Public Employees Retirement System.

In general the findings are the same as they were in this post last year, since one year of data isn’t going to make a big difference for something as slow moving and inexorable as pension funding.  Unless there is a big retroactive pension increase, and its cost is actually admitted to. One big thing that did happen in 2012: there was a huge increase in taxpayer contributions to the New York City Employees Retirement System, balanced by a reduction in contributions to the New York City Teachers Retirement system. And one thing I learned this year: there have been more early retirement incentives in the crippled New Jersey public retirement system than I was previously aware of. Further discussion, and a spreadsheet with a series of charts can be found on “Saying the Unsaid in New York.”