Fuzzy pension math
EDITOR: No wonder public pensions are in such a mess; just look at their fuzzy math. With great hoopla, Lisa Maldonado and Tom Popenuck point out that both CalPERS and CalSTRS are “way above” their needs because they recouped losses from 2008 (“Reed's pension cuts bad for everyone,” Close to Home, Monday).
Great, but the actuaries projected that those funds would increase 7.5 percent a year for each of the last six years. Compounded, those funds are now more than 50 percent below their actuarial projections just six years ago. That is one huge — intractable — problem.
Defined benefit pensions have proven to be unsustainable in global markets. Just last week, Boeing terminated pensions for more than 68,000 employees, moving them to 401(k) plans. Boeing is one of the last major employers to do so. Only the public sector hasn't gotten the message of competition.
Those in the private sector who do compete in the global marketplace, who take risks, accept responsibility are held accountable for their actions and put skin in the game should not be asked to provide total compensation greater than their own to those in the public sector, who do not.
The only discussion citizens should be having is when — not if — public pensions mirror private sector retirement plans.