Public employee pension funding estimates screwed up

Here are two related stories that indicate that actuaries screwed up the real cost of public employee pensions. In the first, a prominent actuary, Jeremy Gold,  blames his fellow actuaries for irresponsibly underestimating the costs. As he said: "“I’m here to tell you a story about how a profession failed to fulfill its duties to the public and thus aided and abetted the very real crisis in public pension plans."

As summarized by wirepoints:

It’s all there — all the things we’ve been saying constantly on this site — how pension obligations are understated, why actuaries do it, why politicians like it, why pensions are “intergenerational theft,” why the public has been duped and why the official numbers reported by the media are junk.

Here's Gold's speech, if you're interested in all the fine details:

The second story is how Evanston is considering a 2-percent increase because its actuary fell short in his estimates of what its public safety pension costs will be.

This shouldn't come as news because it was no secret that some state public pension funds were calculated on the basis that the fund investments would earn 8 percent annual interest and dividends. Any fool knew that was crap, but who was paying attention?

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