Twin Cities’ vaccine and mask mandates are pointless
In most places around the globe, Omicron has peaked as fast as it came. Data from South Africa, for example, suggests that Omicron peaked in the week ending December 25th.…
Here is some good news: the Star Tribune ran a story about recent public pension hearings. The story headlined the “Minnesota” section last Sunday with “Longevity strains state pensions: Our 2nd highest U.S. life expectancy throws a wrench in retirement funds’ projections.” Except for my commentary, the paper has only covered the issue sporadically over the years so it has no in-house expertise.
As a result, the reporter covering the story, probably did not know enough to ask hard questions or connect any dots. So instead she just reported the latest excuse offered by the fund managers to legislators for why the funds are in tough shape. (For years the funds have blamed the stock market crash in 2008-2009 but that is wearing thin). This latest excuse is brilliant. It has the virtue of stroking our Minnesota ego while deflecting any blame from how the pensions are run. “Oh well, it is because we are just so darned healthy and live so long that the pensions are underfunded! You betcha.”
Minnesota’s fund managers did not just learn that our population lives longer than folks in other states—they have known that for years. (“Hey Ole, who knew that most teachers are women, and darned if they don’t live longer than men. Don’t tell Lena!) But the funds are under pressure to bring the longevity assumptions up to date, while updating other bad assumptions, such as an 8.0%-8.5% rate of return and discount rate. That means the funds just got a whole lot more expensive, which means another increase in contributions—or heaven forbid, a cut in the benefit.
In 2016, most of those increased contributions are going to fall on the taxpayer, identified as the “employer” in the article. MSRS is the only fund asking for employees to pay more (.5%); the taxpayer will pony up an additional 1.5% to MSRS. That is a big hike. Most retirees will take a hit on their COLA, something private sector retirees simply do not enjoy because it is an unsustainable promise that only government would make! This is what the pension funds call “shared sacrifice.”
Here are a few quick facts not mentioned in the article:
The Strib also reported on the understandable howls coming from retired and soon to be retired Teamsters in the Central States Pension Fund. That “private” pension fund is in really bad shape. Why? Bottom line: the unions and employers were not honest with employees about how much money was needed to cover the benefits they promised. This has been made much worse by the fact that employers have gone bankrupt or just gone out of business, some because of pensions. What do the Teamsters want? A taxpayer bailout.
A tough but bi-partisan deal to save the fund was cut by now retired Democratic Rep. George Miller of California, and Minnesota’s soon-to be-retired Republican Rep. John Kline –note that both leaders did not plan to run again for Congress.
Public employees have to understand: if Minnesota does not put enough money aside each year to cover your benefit, you are going to end up just like the Teamsters. Because one of these days, Minnesota is going to run out of somebody else’s money.
Then public employees may wish they had one of those “risky” 401ks, where they own they own and control their retirement assets.