Pension Funds Not Going Broke (Courant LTE)
http://www.courant.com/news/opinion/letters/hc-le-thomas-pension-0726-20100726,0,3244465.story
July 26, 2010
First, ignore deep cuts already made to government pension benefits. Second, pretend that no payments are made for unfunded liabilities, which are a large portion of payments that employers, state and municipal, actually make. Then reduce the pension fund balances as if the funds had to make up this imaginary shortfall.
Third, use actuarial formulas to inflate and misrepresent pension liabilities.
That is how the Northwestern “study” claims Connecticut’s pension funds are going broke [Our View, July 23, "Pension Fund Going Broke"].
Starting at a low point after the 2008 stock market misery, the Northwestern projections have the pension funds falling from $20.4 billion to $17 billion by now, on the way to zero. In reality, due to robust investment returns, the funds have grown to $23.6 billion, while still making annual payments to retirees.
So the projections are wrong: $6 billion wrong. They are that far off after only a year and a half of a 10-year projection.
The funds are not going broke. They are growing and bringing in investment returns to help pay for pensions to teachers and state and town workers.
Carol M. Thomas, Storrs
The writer is a member of the Investment Advisory Council of the Office of the state Treasurer.
Copyright © 2010, The Hartford Courant
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