Pension Email Tsunami

Shortly after submitting my email address to Pension Watch, where the URL contains both the words "pension" and "tsunami", it was clear that they should have also worked in the word "email" somehow because what follows the clicking of the "Submit" button is a sort of daily email tsunami of pension news, most of it painting a not-so-rosy picture of the defined benefit retirement system.

If you submit your email address, here's what your inbox will soon look like (even The Daily Reckoning doesn't send this much mail).


The articles pile up quickly with an astonishing emphasis on New Jersey and San Diego, where the government pension systems seem to have nearly run aground in recent months.

Here's a sampling.

New Jersey: Corruption Probe Brings Vows of Change
A leading senator gets indicted on federal corruption and fraud charges. Subpoenas are delivered throughout the state Capitol. The state budget is scrutinized. Veteran lawmakers opt against seeking re-election.

What's going on in Trenton?

"All public officials in New Jersey should remain on notice," warned U.S. Attorney Christopher Christie, who often notes his office has convicted 107 government officials on corruption charges in the last five years.

New Jersey: Garden State Robbery (editorial - New York Post)
Say this for New York's governors and Legislatures: For all the fiscal shenanigans they've perpetrated since time immemorial, they've always been smart enough to keep their greedy little hands off of the state's pension fund.

Not so the powers that be in New Jersey - who decided about a decade ago that the future nest-egg of the Garden State's public employees would better serve as Trenton's private piggy bank.

Who ever thought that Albany would ever be held up as a model of fiscal rectitude?

New Jersey may not be the only state with a pension-funding mess, but what the folks across the Hudson pulled off over the past decade is positively breathtaking in its audacity.

New Jersey: State's Pension Shortfall Explained
A growing shortfall in the public employee pension system is "one of the greatest challenges" facing New Jersey, Governor Corzine said last week. Here's a look at what's happening, how things got this way, who is affected, and possible solutions.

What exactly is the shortfall?

It's how much more money should be in the state-administered pension funds right now to pay the benefits promised to employees and retirees of state, county and local government agencies and schools. As of June 30, 2006, the market value of the pension funds was $77.7 billion, while the total liability, or the state's estimate of the benefits owed, was $110.4 billion. That produces a shortfall of nearly $33 billion.

San Diego/city: Mayor to Push Cutting 300 Jobs
To secure modest spending growth, Mayor Jerry Sanders will recommend slashing more than 300 jobs when he unveils portions of his 2008 budget proposal Monday.

It's another step in Sanders' attempt to fulfill numerous campaign and first-year pledges to cut back on the number of city employees, yet preserve most services as he faces San Diego's mounting budget obligations.

Sun Health of Arizona Will Freeze Pensions, Shift to 401(k)s for New Hires
Sun Health will freeze the pensions of about 2,000 employees as part of a cost-savings move by the health care organization that includes the Boswell and Del E. Webb hospitals in the West Valley.

The West Valley-based organization of hospitals and health clinics instead will shift the responsibility for retirement planning to its employees through bolstered 401(k) savings plans under changes announced to workers over the past week.
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The move is part of a trend of corporations steering away from defined benefit pension plans in favor of 401(k) savings that include a company match but ultimately make employees responsible for their own retirement savings.

Health-Care Costs Put Ohio Public Safety Forces in a Bind
Escalating health-care and insurance costs are causing problems for many Americans. Premiums have increased about 87 percent since 2000, and employers are shifting more health-care costs to workers or dropping insurance plans altogether.

State pension funds are not immune.

"I never thought I'd hear this, but I've had members tell me that they're making decisions on, 'Do I eat or do I buy medication?' " said Gary Siniff, president of the Central Ohio Retired Firefighters.

Despite growth in investments, retirees in the fund are picking up about one-third of their health-care costs.

Premiums average about $198 a month for a retiree under age 65 and $430 for a spouse. As a result, many have dropped spouses from the plan, joined their working spouse's health policy or taken jobs to pay for premiums.

Stanislaus County, Calpers Bucks Trend; Near Full Funding at 96.6%
Underfunded public pension plans are a growing problem across the country, from San Diego County to states such as Illinois and New Jersey.

News reports have called it a ticking time bomb as waves of baby boomers begin to retire.

But it's not a problem for the Stanislaus County Employees' Retirement Association.

StanCERA's pension system is close to fully funded, at 96.6 percent.

"Anything over 90 percent is considered to be very good," said Clark McKinley, a spokesman for CalPERS, the state retirement system.

The CalPERS system is at 92 percent, McKinley said. "Ninety-six percent is excellent," he said.

South Lake Tahoe, California Scrambles to Fill Retirement Coffers
The pressure of an aging society has come down on South Lake Tahoe's local government as employees in their 50s elect to move on to the next stage of their lives.

The average age of the city's 215 employees is 43.1, less than seven years from the time of early retirement. As of Sept. 30, 2006, 106 retirees participated in the plan at a cost to the city of $1.1 million per year at an annual basis, city records show.

The city pays out 9 percent of salaries to public safety employees and 8 percent to other employees. These benefits have been doled out on a pay-as-you-go basis.
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The task of granting full health care and pension benefits to its employees seems more daunting to local governments.

If you are interested in the continuing developments in this area including the growing public pension envy/backlash dynamic that is now festering in parts of the country and may soon be sweeping the rest of the country, this is a great source of information - just prepare to get wet.