Monday, January 29, 2018

Did CalPERS Use Accounting “Gimmicks” to Enable Financially Unsustainable Pensions?

By Edward Ring January 24, 2018

Gimmick – a concealed, usually devious aspect or feature of something, as a plan or deal – Dictionary.com.

In the past week, from Millbrae’s city hall to the inner sanctum of the CalPERS leviathan in Sacramento, defenders of pensions have been active. In particular, they have criticized the recent analysis, published by the California Policy Center, “How Much More Will Cities and Counties Pay CalPERS?” It would advance the ongoing debate over pensions to summarize the points of the CPC analysis, how CalPERS and their allies attacked those points, and how those attacks might be challenged.........

GIMMICK #1 – THE CORRUPTION OF “ASSET SMOOTHING”........
GIMMICK #2 – CREATIVE AMORTIZATION OF UNFUNDED LIABILITY .........
GIMMICK #3 – OVERESTIMATING LONG-TERM RATE-OF-RETURN ASSUMPTIONS.......
GIMMICK #4 – QUIETLY ALLOWING THE UNFUNDED PAYMENT TO DWARF THE “NORMAL” PAYMENT ...............

CALPERS IS NOT UNIQUE

What has been described here does not just apply to CalPERS. It is the rule, not the exception, for every one of California’s pension systems to engage in the same gimmickry. The consequences for California’s cities, counties, agencies, and system of public education are just beginning to be felt........... To Read More....

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