POWIP Piece of Work In Progress – Former Abode of Dan Collins

Doing Public Pensions the Right Way

Long version here from Girard Miller at Governing.com. A separate report from the Government Finance Officers Association is here.

Short version:

1. 1. No crazy benefits
2. 2. No crazy assets
3. 3. Pay for benefits when they accrue (and not after the person has retired), and make sure employees have skin in the game
4. 4. Get real about benefit assumptions (e.g., asset return assumptions, retirement ages, etc.)

Of course, the problem is that for many public pension plans, it's way too late to do this. As per Dan's earlier post, there's a nice little cycle going on where the politicians goose the pay and benefits for themselves and public unions, and the public unions make sure these pols get re-elected (or provide a soft landing should they lose office).

Miller had a followup where he talked about adjusting retirement ages, or at least adjusting benefits downward for actuarial equivalence for early retirement. I have various technical questions about this. But this is all tinkering on the edges.

The inherent problem - that of very interested actors "choosing" their bosses (via electoral effort) and politicians voting up their own benefits and that of the public unions, I have a modest proposal:

1. No pensions at all, of any kind, for politicians.

2. No public unions.

I figure that would be a good start.

Just as a starting point.

Meep

Meep is a member of the Irish Catholic mafia, having a suspiciously high number of green-eyed, red-haired friends. While she doesn’t have red hair herself [except when she goes into the sun (rare for any vampire)], she does have green eyes. She’s a raving Papist and is a life actuary on the side [i.e., she counts dead people]. An amateur pain-in-the-ass [willing to go pro!], she likes covering retirement, mortality, math, and education issues.