Friday, September 04, 2009

ever more pension prognosticating

So . I still don't get what the point was to look at data 3 years old to see where we will be in less than two years if there is more current data available. But....

Nonetheless, the state says maybe, maybe, maybe the city can get to a 50% funding level in a couple years.  That would still make it pretty much the least funded system in the state, at least for larger pension funds. Some of the assumptions baked into that have not even been true in the years since 1/1/2007!

But there is a quote in the story of note:
He said the city made a formula mistake that resulted in a significant overestimate of the long-term benefits of the mayor's plan. The administration's analysis estimated that the fund would, by 2037, hold 85 percent of ideal levels, but Mr. Allen said it would really only be 69 percent funded if everything went according to plan.
So basically if lots of things go really well, then by 2037 the pension fund can get back to the funding level it achieved in 1999 after the 2nd pension bond was floated.  Here are the 'official' funding ratios for the city's pension fund over the last decade or so.  As of January 1, 1999 it reached 64% and was probably a bit higher in the months preceding that.   Such is what counts for progress around here.


Blogger Bram Reichbaum said...

I'll take the funding level we achieved in 1999 -- we had a relatively good run in the '00's -- if it means then, after a glide-path, the monkey is off our backs forever. Show me where that's irrational.

We might even be able to dedicate any theoretical overage from the garage leases into to some kind of special stimulus-matching capital fund. Start transforming this old burgh already.

Friday, September 04, 2009 12:16:00 PM  
Blogger C. Briem said...

let's see. The current data has a much higher rate of expenditures than that analysis is based on. See:

The rate of return is optimistic and will require going heavy into equities which I doubt any reputable investment advisor will implement.

The discount rate behind all of that is way out of line with what private sector analysis requires (a problem across the board in public sector pension calculations) so it's all notional to begin with.

and even the $200 million that could be net out from the parking assets is notional at best. How well did the expected bids for the turnpike worked out.

so basically every piece of it is probably fiction in some way. You have to make assumptions about long range things like this, but I bet every assumption errs toward a lower pension liability calculation. But we will see.

and I won't get into the fact that state aid for the city is likely not going be on pace with what is expected. That's just a side little issue nobody is talking about.

May we both be alive to prove the 2037 prediction true.

Friday, September 04, 2009 12:27:00 PM  
Blogger C. Briem said...

and anyway.. 69% funding ratio would still be a pretty dire funding ratio for almost any other pension system on the planet. That it even sounds good is a bit of fiscal relativism.

Friday, September 04, 2009 12:34:00 PM  
Blogger Bram Reichbaum said...

Perhaps I'm being unclear. Me personally, I'd like to dive headlong into the warm embrace of the state when it comes to managing and doling out our pensions, given that the law is the law. But I want PGH to have a defined, realistic, non-predatory schedule for contributions to the state going out in to the future, that takes into account both possible targeted revenue opportunities AND the state's great own resources and its abilities as a thing that is much more too big to fail.

That's why looking at the administration's plan (which may still be in beta) and seeing where we can tweak it makes good sense.

Friday, September 04, 2009 12:46:00 PM  

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