New York State Pension Value Rises to Record High $160.4 Billion | TigerDroppings.com
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HNTIGER1980
LSU Fan
Member since Oct 2011
439 posts

New York State Pension Value Rises to Record High $160.4 Billion

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Meaning that spendthrift states will not reform anytime soon. Dammit!


BennyAndTheInkJets
Arkansas Fan
NYC / Orange County
Member since Nov 2010
4294 posts

re: New York State Pension Value Rises to Record High $160.4 Billion
Says absolutely nothing about the state's funded status, which is being calculated with a ~8% discount rate.

That story looks like it was sent directly from the NYSCRF to Bloomberg.


HNTIGER1980
LSU Fan
Member since Oct 2011
439 posts

re: New York State Pension Value Rises to Record High $160.4 Billion
quote:


Says absolutely nothing about the state's funded status, which is being calculated with a ~8% discount rate


Guide me here, Im not a finance expert. What does that mean?


Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
58939 posts

re: New York State Pension Value Rises to Record High $160.4 Billion
quote:

Says absolutely nothing about the state's funded status,


I think that was the point. To imply that it was maybe even overfunded. It's a feel good story that I'm not buying. Especially in New York.


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BennyAndTheInkJets
Arkansas Fan
NYC / Orange County
Member since Nov 2010
4294 posts

re: New York State Pension Value Rises to Record High $160.4 Billion
quote:

Guide me here, Im not a finance expert. What does that mean?

So the main purpose of their pension plan is to pay benefits, their benefits are their liabilities. What pension accounting does is it takes what your expected returns are and discounts your future liabilities by a certain rate. The notion is that you will be able to earn that return to pay for the future liabilities. Your funded status is the ratio of your assets to your discounted liabilities.

What is crazy is that corporate pension plans must discount on the Citi AA corporate curve, which reflects current market rates (except that they smoothed that a little bit last year with the MAP-21 legislation). The idea is that you earn what the market gives you, which generally is correct. Public pension plans do not have the same discounting number, they basically just pick a magic number that they expect to return (usually about 8%) and discount liabilities that way. The higher your rate is, the lower your liabilities are. Public pensions are already massively underfunded, even given very high return assumptions. If they had to discount based on market rates, funded statuses would get A LOT higher. And I mean A LOT.

This is another example of why its hilarious that politicians criticize corporations. Corporate pensions are governed by ERISA and PBGC and require certain contributions when funded status gets low enough. Public plans are supposed to but politicians have time to time just not made the contribution (looking at you Chicago).

BTW, New York state is absolutely underfunded.


Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
58939 posts

re: New York State Pension Value Rises to Record High $160.4 Billion
We bash insurance companies when they arbitrarily state high expected returns in hypotheticals given to potential policy holders and we even enact law to prevent it (if I remember right), yet we allow this to happen. I don't get it.


BennyAndTheInkJets
Arkansas Fan
NYC / Orange County
Member since Nov 2010
4294 posts

re: New York State Pension Value Rises to Record High $160.4 Billion
Politicians are hipocrits and regulators are given jobs by politicians. If you have the ability to write laws for yourself, you're bound to give yourself a little more leeway than if you're writing laws for other people.


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slackster
LSU Fan
Houston
Member since Mar 2009
7536 posts

re: New York State Pension Value Rises to Record High $160.4 Billion
quote:

We bash insurance companies when they arbitrarily state high expected returns in hypotheticals given to potential policy holders and we even enact law to prevent it (if I remember right)


Any hypothetical rate must be accompanied by a 0% annual gross return as well.


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