MAYOR JOE FORD’S RETIREMENT TASK FORCE
I was asked to join this task force by interim Mayor Joe Ford and I appreciate the invitation and his willingness to allow the public to review the pension situation for County employees. I am especially appreciative considering the actions of the City Council in rejecting my application submitted by interim Mayor Myron Lowery for appointment as a public member of the City of Memphis pension board.
Our first meeting was on Thursday, January 7, 2010. Attending were Chairman Mike Ritz, Deputy Chairman James Martin, citizen member Bob Fockler, myself, Briana Kuhn and several others.
I will be reporting on these meetings in the future as we will be meeting each Thursday until this summer. The stated mission is
- To review the current long term financial status of the retirement system.
- To review different options to reduce the long term liabilities of the retirement system.]
- To consider a new Plan D for new employees as a way to reduce the long term liabilities of the plan.
Here is a statement from the Wall Street Journal about public plans nationwide and another statement from the national center for policy analysis about Illinois retirement plans.
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. (WSJ)
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. That’s nearly $87,000 per plan participant. With employee benefits guaranteed by law and sometimes even by state constitutions, it’s likely these gargantuan shortfalls will have to be borne by unsuspecting taxpayers. (NCPA)
I am reading and learning and will post more information in the future. I call on the public to comment and give me your expertise on these matters. We need to have an open public discussion about these financial obligations and our ability to meet what we have promised to public employees.