Meet the real villain in the public pension crisishttp://theweek.com/articles/544576/meet-real-villain-public-pension-crisis
Meet the real villain in the public pension crisis
by Jeff Spross
Critics of the defined-benefit plans often assert this is necessary because governments use the more generous packages as cover for fiscally deceptive political games, promising workers future benefits while not properly funding the plans and instead spending the money in the here and now.
This argument is largely bogus. The National Association of State Retirement Administrators (NASRA) recently looked at the management of 112 state-administered pension funds from 2001 to 2013. They found the plans received an average of 89 percent of their required annual contributions, and only six states New Jersey, Pennsylvania, Washington, North Dakota, Kansas, and Colorado averaged less than 75 percent. Half the plans got 95 percent of the needed amount.
"There is a perception that many plans and states have failed, when in fact it's only a handful of states," Keith Brainard, NASRAs research director, told Business Insurance. With the exception of a handful of outliers, "most states have made a reasonably good effort."
A 2011 study by the Center for Economic and Policy Research (CEPR) came to the same conclusion. What went wrong, in a nutshell, was the 2008 financial crisis. The plans NASRA looked at were just beginning to close a modest gap opened up by the 2001 recession, plus some changes to benefits, when the latest crash expanded the combined shortfall of all the plans from $5.8 billion in 2008 to $17.8 billion in 2013. It hit a nadir at $19 billion in 2012.
Shouldn't the Wall Street recovery over the last few years have restored the value of the pensions asset bases?
There isn't any information in the article on this. Makes me think there is more to the story than is being addressed in the article.
...some of those assets weren't liquidated during the lean times to compensate for the gov't skipping payments.