April 5, 2007

Insanity is when you make the same mistake over and over and.....

Surprise, surprise. Yet another pension-fund-gonna-go-bust story. It's a bore; there are so many of them. States, countries, organizations, companies of all sorts and colors.

The INSANITY is that it just goes on and on. Decade after decade. Although many individual organizations have learned better, we don't learn as a a society.

This Jersey thing is a "defined benefit" plan. That is, you define how much the retirement benefits will be, and then try to keep putting enough money in to make that happen. (Sort of like making a New Years resolution about what your weight will be next Christmas, and promising to eat so as to make that happen.) The alternative is a "defined contribution" plan, which says "We will take X dollars each month and put it in your 401-K, and you will have whatever retirement benefits your investments yield."

In 2005, New Jersey put either $551 million, $56 million or nothing into its pension fund for teachers. All three figures appeared in various state documents — though the state now says that the actual amount was zero.

The phantom contribution is just one indication that New Jersey has been diverting billions of dollars from its pension fund for state and local workers into other government purposes over the last 15 years, using a variety of unorthodox transactions authorized by the Legislature and by governors from both political parties.

The state has long acknowledged that it has been putting less money into the pension fund than it should. But an analysis of its records by The New York Times shows that in many cases, New Jersey has overstated even what it has claimed to be contributing, sometimes by hundreds of millions of dollars.

The discrepancies raise questions about how much money is really in the New Jersey pension fund, which industry statistics show to be the ninth largest in the nation’s public sector, with reported assets of $79 billion.

State officials say the fund is in dire shape, with a serious deficit. It has enough to pay retirees for several years, but without big contributions, paid for by cuts elsewhere in the state’s programs, higher taxes or another source, the fund could soon be caught in a downward spiral that could devastate the state’s fiscal health. Under its Constitution, New Jersey cannot reduce earned pension benefits....
(Link. Thanks to Orrin)

Just read the story, and THINK a bit. (I'm talking to YOU, Mr Democrat loyalist.)

The big lesson of the 20th Century (besides that one about Revolutions that are going to help the Workers and Peasants) is that defined-benefit plans don't work. But the madness goes on and on. And the biggest insane-rip-off of all is called Social Security. And when President Bush proposed a mere small start at ending the insanity, every brain-dead lefty in the country opposed him, and conservatives gave him only tepid support. (And then they have the nerve to say that Bush is betraying conservatism! When the sums he was trying to get out of the hands of government, and into the control of ordinary people make all our recent budget deficits look like pocket change.)

Posted by John Weidner at April 5, 2007 7:05 AM
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