No. of Recommendations: 17
True, but as you probably know, state pensions do make actuarial assumptions that can impact the ability of the fund to remain fully funded in the long term.


However, there is a lot of talk about public employee pension plans shortfalls having to be made up by taxpayers and by the union members having their contributions increased or by current retiree benefits reduced.

What happens when a public employee pension fund is momentarily in surplus? The politicians reduce the amount they pay into the pension fund, and blow the money on something else to buy votes. Then the market goes soft, the pols discover an "emergency" and either cut the pension, or remove pensions from the employee's collective bargaining rights, then cut them, all the while demagogueing the issue as "these government employees are too coddled. their benefits are above the average, so they deserve a cut".

Boeing's defined benefit pension fund had a billion dollar surplus 10 years ago. The company diverted billions into buying back stock, instead of funding the pension plan as it should have. Now, in spite of a stock market that has been rising for years, the pension fund has a $20B deficit, second only to GE.

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