So you don’t believe the dire predictions of the future of public pensions in the state of California?
Well, much has been written about The California Public Employees’ Retirement System (CalPERS) being underfunded by $500 billion due to massive investment losses over the last 5-10 years. One of the most understated and misunderstood issue is how one bad year can have disastrous effecto on the overall health of the fund. See graph below how one bad year lowers the effective multi-year rate of return:
Now we have video of a CalPERS Senior Pension Actuary (Kung-pei Hwang) describing how they intend to change basic assumptions in their financial model to hide the decline in their assets held for municipal, county, and state employee’s retirement.
Here is the link to the video proof.
Big Governement is reporting:
Through this statistical gimmickry, CalPERS can push the loss into later years and appear solvent today. Of course, at some point in the future it will need to raise funds from state and local governments to compensate for these losses. But for now, they seem content to hide the disastrous condition of their fund.
As you can hear Mr. Hwang say in his presentation to the Huntington Park City Council last week, “that means we will defer most of the loss to future years.” “This means the city will realize another increase in future years. I hate to bring bad news, but those are the facts.” Well, the fact is this bad news will hit budgets for all cities, counties and the state of California and not just Huntington Park. By playing with its financial model in this way, CalPERS is treating all California taxpayers like Madoff investors by cooking its actuarial books to Hide The Decline in its assets.
The 5:30 minute video is well worth the time.
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