Why Illinois' pensions are such a mess

"Responsible funding methods do not work this way."

"Illinois's [pension] disclosures are "somewhat misleading."

"[Illinois'] funding method 'may not be an appropriate one.'"

This is required reading for anyone who wants to understand the nature of Illinois' pension funding catastrophe. Illinois hasn't just been stealing from its underfunded pension accounts to pay for the state's day-to-day expenses, it also has been seriously fudging how it calculates how much it must set aside to pay for its hyper-generous pensions.

This helps you understand the background of why the Securities and Exchange Commission, among others, is suspicious of Illinois pension fund accounting. The above quotes pretty much summarize the views of those who understand the arcane problems of Illinois' actuarial quick step to make the problem look not so bad. This article comes from the New York Times, so rest assured that the rest of the county that is interested in such arcane issues knows about Illinois' shaky situation.

Pray for us. 

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  • Pension systems are fraught with problems like these, as it is too easy for politicians to make easy choices now and defer hard choices for later. Unfortunately, I think the time has come to acknowledge that defined benefit plans are too dangerous to permit in the public sphere, and state workers need to be transition to defined contribution plans.

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