Turbulent Wall St. erodes state pension funds

[flashl]

$4 billion drop since July bodes ill for taxpayers' burden down the line

New Jersey's underfunded pension funds, already billions of dollars short of what they need to cover future retirement benefits, have been battered by stock market turmoil on Wall Street and overseas, a report released yesterday shows.

As of Jan. 31, seven months into the current budget year, the pension funds were worth $78.1 billion, $4 billion less than when the budget year began July 1.

...

Overall, the funds' investment return for the fiscal year is -1.26 percent. Unless returns surge in the final five months of the budget year, the losses will haunt future taxpayers because of a complicated formula actuaries use to determine how much taxpayers should put into the system each year. It assumes the funds will earn an average of 8.25 percent each year. Whenever investment returns fall below that average, taxpayers are tapped for the difference.

This year, for instance, the state was scheduled to deposit $2.2 billion into the accounts to cover benefits for 700,000 government workers and teachers and to start paying down a $24.8 billion deficit. Instead, lawmakers agreed to make 50 percent of the required contribution.

The Star Ledger

[rfranklin]

1. We should let them have Social Security...

seeing as how they have done so well with pensions.

[AdHocSolver]

2. The stock market is a scheme for stealing money from suckers. This scam steals from taxpayers, too.

Just as gambling is rigged to ensure a profit to the house, the stock market is set up to ensure large profits for the insiders at the expense of those foolish with their life savings.

Even when the company goes belly up, as in the case of Enron, the insiders slink away with millions of dollars in profit. It makes no difference whether the company survives the theft or not. It has served its purpose which is to make big profits for the insiders.

The paragraph quoted above describing the scheme explains it all.

(snip)
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Overall, the funds' investment return for the fiscal year is -1.26 percent. Unless returns surge in the final five months of the budget year, the losses will haunt future taxpayers because of a complicated formula actuaries use to determine how much taxpayers should put into the system each year. It assumes the funds will earn an average of 8.25 percent each year. Whenever investment returns fall below that average, taxpayers are tapped for the difference.
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The "earnings" from stocks are supposed to reflect the risk taken by the investor. Earnings can come in the form of dividends or from capital gains ("smart" buying and selling of stocks). The GUARANTEE of a MINIMUM annual return of 8.25 percent, and the taxpayers being obligated to pitch in to cover a short fall, tells you that this is nothing less than thievery.

How so? First, dividends are supposed to be paid to the stockholders for the use of their money. Few companies pay that much out as dividends. Second, capital gains are supposed to be the benefit an investor receives for taking risk in investing in a specific company. The stock value can go up or down. Stocks are NOT a guaranteed investment. For a guaranteed investment, you put your money into an insured CD.

The fact that the rules were written so that the taxpayer covers any losses is proof that this is a scam to ensure the insiders of a continuous source of funds replenishing the stock prices as the insiders suck out the money into their own accounts.

The stock market is nothing more than a giant Ponzi scheme. Privatizing Social Security is a scheme for thievery. Getting pension funds to gamble in the stock market, and forcing the taxpayers to guarantee the profits, is also thievery.

P.S. This scheme is comparable to having the taxpayers replenish any losses incurred by gamblers in Las Vegas.

[abelenkpe]

3. So how is one supposed to save enough for retirement

If they aren't in the stock market?