Tag archive for pension liabilities

Capital is indeed mobile

My colleague Steve Malanga writes an excellent analysis on why “Businesses Should Fear States’ Big Pension Debts.” His story underscores the important point that capital is mobile. The fiscal environment of a given state or geographical region are important factors in the corporate decision-making process of …

Three charts on the fiscal condition of state and local governments

This past Friday’s jobs report showed continued strength in jobs numbers for state and local governments, led by the latter. This year, local governments have added 45,000 jobs, which may not sound like much, but municipalities had lost jobs in nearly every preceding month going …

Detroit’s big debt-restructuring question

Last Friday, Detroit Emergency Manager Kevyn Orr laid out a plan to the city’s creditors. While the plan is exactly what you would want for the city — it contains initiatives to save money in every area of current operations, to collect owed revenues, and to equitably pay down debt — there are still open questions about its treatment of pension benefits.

Ten takeaways from Detroit’s presentation to its creditors

Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Charles Dickens, David Copperfield.
Detroit’s plight has been carefully detailed by many studies (here and here).  But Emergency Manager Kevyn …

Pension funding and Moody’s new rating standard

An important fundamental principle of defined benefit pension funding is that benefits should be funded as they are earned and therefore “paid-up” or fully-funded in the aggregate as a group retires.   As an illustration, any deficits associated with a workforce whose average age is 45, which is assumed to …

Pension plan investment assumptions: still way too rosy

Andy Kessler’s wrote a timely article and a worthwhile read published in the April 9th edition of the Wall Street Journal.  He deals with the rosy annual investment expectations, in the 7.5% to 8%, range underlying most public sector defined benefit pension plans.  As he …

Pensions: Contributions minus withdrawals plus lousy market=yikes!

The Census has released its latest quarterly report on State and Local Pensions. To watch the flow of funds in and out of pensions is always illuminating, and the report illustrates the fundamental issue  with many of our state and local systems, which must rely …

Public pension fallacy #5 will not go away

One of the most common fallacies confronting pension reformers is the accusation that we are “projecting” low rates of return on public pension investments. This is public pension fallacy #5 in my recent paper, ”Nine Fallacies Used to Defend Public-Sector Pensions.”
The cliffs-notes response is that we are not …

Is Baltimore Stockton?

Just as state and local governments had begun to show some signs of stability, headlines last week proclaimed that Baltimore was going down. Is this so? Is Baltimore the next Stockton?
As The Wire‘s Stringer Bell notes in the image above, Baltimore has many problems. Some old …

What we mean when we refer to pension and healthcare costs as “unsustainable,” in one chart

This chart is from a report on Baltimore’s Ten-Year Fiscal Forecast, prepared by Public Financial Management, Inc. It was commissioned by the mayor of Baltimore. It speaks for itself.