Post by Chris_Wendt on Jul 26, 2014 7:10:35 GMT -5
The Pension Bomb: that quietly but inexorably growing risk, exposure; a cancerous liability for public school districts and most governmental units and their taxpayers to pay for future state pensions. The fuse was lit long ago, the laws, the rules, the working of our state pension funds created the situation. Want of foresight and lack of expertise has allowed an originally good situation to go bad, and then to go from bad to very bad, and from very bad to even worse. The word, "untenable", means unable to be supported, and that is what the inculcated liabilities of the NYSTRS (Teachers) and NYSERS (Other than teachers) retirement systems have become. But wait! There's more!
"New Actuarial Tables May be a 'Nail in the Coffin' for DB (Defined Benefit pension) Plans", blares the headline on this week's Pensions&Investments newsletter (link). DB means regardless of the economy and especially regardless of what members contributed toward their own retirement (even if ZERO), when you retire from a DB plan (like NYSTRS or NYSERS), you are entitled to a defined amount of money for the rest our your life, and/or the rest of your spouses life. How much money the state or the plans (NYSTRS/NYSERS) will have to amass to pay future pensions to people still working in the school systems and elsewhere in the State is determined by actuarial tables, official forecasts of the life spans of participants based on gender, age, longevity in their positions, and well-established mortality rates.
BAD NEWS. New mortality tables (updating the 2000 tables) released by the Society of Actuaries, "reflect an increase in life expectancy of Americans, resulting in increased pension plan liability values and liability durations. The means NYSTRS and NYSERS, and the taxpayers of the Wantagh School District will have to pay more money for more years to fund school pensions on and on into the future.
The new tables are expected to be officially adopted by the IRS for (fiduciaries to use in determining) funding (requirements for) the 2016 Plan Year. That would impact Wantagh Schools in the 2016-17 school year, in the budget we* will vote upon in May, 2016.
Don't shoot the messenger, please!
Chris Wendt
* I used the pronoun, "we", figuratively; I do not plan to be living in this state by May 2016. -CW
"New Actuarial Tables May be a 'Nail in the Coffin' for DB (Defined Benefit pension) Plans", blares the headline on this week's Pensions&Investments newsletter (link). DB means regardless of the economy and especially regardless of what members contributed toward their own retirement (even if ZERO), when you retire from a DB plan (like NYSTRS or NYSERS), you are entitled to a defined amount of money for the rest our your life, and/or the rest of your spouses life. How much money the state or the plans (NYSTRS/NYSERS) will have to amass to pay future pensions to people still working in the school systems and elsewhere in the State is determined by actuarial tables, official forecasts of the life spans of participants based on gender, age, longevity in their positions, and well-established mortality rates.
BAD NEWS. New mortality tables (updating the 2000 tables) released by the Society of Actuaries, "reflect an increase in life expectancy of Americans, resulting in increased pension plan liability values and liability durations. The means NYSTRS and NYSERS, and the taxpayers of the Wantagh School District will have to pay more money for more years to fund school pensions on and on into the future.
The new tables are expected to be officially adopted by the IRS for (fiduciaries to use in determining) funding (requirements for) the 2016 Plan Year. That would impact Wantagh Schools in the 2016-17 school year, in the budget we* will vote upon in May, 2016.
Don't shoot the messenger, please!
Chris Wendt
* I used the pronoun, "we", figuratively; I do not plan to be living in this state by May 2016. -CW
