Pension funds for teachers are short billions

[Ernst Debets]

REPLY TO: D66 at nic.surfnet.nl

Cees,

Waarschijnlijk getroffen door de kredietcrisis.
Het is algemeen bekend dat pensioenfondsen even hard meededen met de CDS
trucs van 85 Broad Street als anderen. Bovendien hebben veel van deze
pensioenfondsen hun geld veelal zitten in Europese aandelen die sneller in
koers daalden dan de pensioenfondsen hun geld eruit konden halen (waardoor
de koersen nog sneller/heftiger gedaald zouden zijn). Opvallend vind ik ook
nog dat een dekkingsgraad van meer dan 75% hier als "positief" verkocht
wordt daar waar in Nederland ten minste 110% de laagste norm is...


Ernst Debets/
Zaanstad

-----Oorspronkelijk bericht-----
Van: owner-d66 at nic.surfnet.nl [mailto:owner-d66 at nic.surfnet.nl] Namens Cees
Binkhorst
Verzonden: donderdag 15 april 2010 13:33
Aan: Discussielijst over D66
Onderwerp: Pension funds for teachers are short billions

REPLY TO: D66 at nic.surfnet.nl

Hoe kun je zo'n tekort hebben als je over de afgelopen 30 jaar 8,6%
rendement per jaar maakte?

Groet / Cees

Analysis: Pension funds for teachers are short billions
http://www.usatoday.com/news/education/2010-04-14-teacherpensions14_ST_N.htm
By Greg Toppo, USA TODAY
The multibillion-dollar pension funds that promise to pay lifetime
benefits to millions of the USA's retired teachers are more than $900
billion in the red, a new analysis shows. The shortfall could put
taxpayers on the hook for nearly three times as much as the funds say
they need to balance the books.

The analysis, released Tuesday from the Manhattan Institute for Policy
Research and the Foundation for Educational Choice, finds that all 59
funds that cover most teachers face shortfalls.

Collectively, the researchers say, the funding gap equals more than
$932.5 billion, or about $600 billion more than the funds themselves
claim in financial statements. The researchers attribute only $116
billion of the discrepancy to turmoil in the stock market. Much of the
difference, they say, is a result of funds lowballing the cost of paying
future benefits, under the assumption that stock values will rise "much
higher" by the time they have to pay out benefits.

"The general picture is not a good one," say researchers Josh Barro and
Stuart Buck. Barro is a fellow at the Manhattan Institute. Buck is a
fellow at the University of Arkansas' Department of Education Reform.

On average, the pair find, the funds - many of them general
state-employee pension funds - say they're 78% funded. But using a more
conservative estimate of projected returns, Barrow and Buck say they're
only about 54% funded. Among the worst, they say: California's State
Teachers' Retirement System (CalSTRS), with a $97.5 billion shortfall.
They say only five are 75% funded or better: teacher plans in the
District of Columbia, New York state and Washington state; and
state-employee retirement systems (which include teachers) in North
Carolina and Tennessee.

CalSTRS spokesman Ricardo Duran said Tuesday that the study uses "the
same unrealistic accounting tricks" that other analysts have used to
estimate high taxpayer costs for teacher pensions. He notes that the
state's "well-diversified investment portfolio" has averaged 8.6% annual
returns for the past 30 years, even with a 25% loss from the 2008 global
market crash.

Barro and Buck say states should consider 401(k)-type retirement plans,
among others, especially for new and young employees.

Last February, the Pew Center on the States estimated a $1 trillion gap
between promised state pension, health care and other retirement
benefits for all state employees and what states "have on hand to pay
for them." Actually, Pew said, the $1 trillion figure "likely
underestimates the bill coming due" because it doesn't fully reflect
"severe investment declines" in 2008.

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