Government Fraud: Pensions
by ilene - July 7th, 2009 9:53 pm
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Government Fraud: Pensions_lrg.jpg)
Courtesy of Karl Denninger at The Market Ticker
I warned people about this over a year ago…..
This morning I had seen a third "notice" that there are widespread "critical shortfalls" in Union Pension Funds.
I put up a short video on the topic and am now getting emails telling me that this is more widespread than has been reported – additional funds have been sending these deficiency notices out.
And in that article I called for general strikes organized by the unions of this nation – what’s left of them anyway.
In fact, here’s the original call:
Yes, I am potentially calling for the Longshoremen to strike every port in the United States.
I am potentially calling for the Teamsters to strike.
I am potentially calling for every State Employee covered by CALPERS to strike.
Of course none of them did.
Now we get this from The Wall Street Journal:
Public employee pension plans are plagued by overgenerous benefits, chronic underfunding, and now trillion dollar stock-market losses. Based on their preferred accounting methods — which discount future liabilities based on high but uncertain returns projected for investments — these plans are underfunded nationally by around $310 billion.
The numbers are worse using market valuation methods (the methods private-sector plans must use), which discount benefit liabilities at lower interest rates to reflect the chance that the expected returns won’t be realized. Using that method, University of Chicago economists Robert Novy-Marx and Joshua Rauh calculate that, even prior to the market collapse, public pensions were actually short by nearly $2 trillion.
Oh, so there’s a little book-cooking going on?
Yeah, you’ve got these "public" pension plans that don’t like the rules that private pension plans have to use for their accounting, and this is what they’re telling their "auditors":
Some public pension administrators have a strategy, though: Keep taxpayers unsuspecting. The Montana Public Employees’ Retirement Board and the Montana Teachers’ Retirement System declare in a recent solicitation for actuarial services that "If the Primary Actuary or the Actuarial Firm supports [market valuation] for
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site