pension fund 
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Tue Jun 29, 2010 at 02:00:00 PM EDT
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While the Governor has used public worker pensions as a club to beat them into submission, all of his talk has lead to making a bad problem even worse when you look at the numbers:The budget skips a $3 billion pension payment, which means the state pensions system, already underfunded by $46 billion, will fall further in the red. Christie and his administration have promised to propose bold pension reforms, setting up a potentially large battle later this year. So he's making a very bad problem even worse, in order to solve it at a later date. The fact is, that $46 million figure could seem conservative according to the latest news:A new report from George Mason University says it's closer than you think.
The university's Mercatus Center studied public employee systems across the country and used New Jersey's as an example of how bad things can be.
"New Jersey's defined pension systems are underfunded by more than $170 billion, an amount equivalent to 44 percent of gross state product and 328 percent of the state's explicit government debt," said authors Eileen Norcross and Andrew Biggs. The reason we have this problem in the first place is because Legislators and Governors from both sides of the aisle played the exact same game Christie is. They talked tough and then when the public wasn't looking, failed to fund their obligations. Of course, those same legislators and governors are also collecting pension benefits from the system they vilify. And now those Legislators and the Governor want to scapegoat the people who were promised benefits because they didn't live up to their end of the bargain, while failing to do so once again. Typical.
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Sat Mar 20, 2010 at 05:11:20 PM EDT
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Patrick Murray is curious about Governor's talk of ending one shot gimmicks, while he continues to use them:As a side note, is anyone else scratching their heads over the continued underfunding of our current pension obligation in Christie's "no gimmicks" budget? I know he's pushing hard for pension reforms, but when does underfunding current annual obligations cease to be a "one shot" to balance the budget? Just curious. Just another promise broken for the Governor, but it's ok because he made those when he was a candidate. Maybe he thinks he can't be held responsible for things he said on the campaign trail. He says he is making the tough choices, but John Bury at NJ.com says he's taking the easy way out by not making a payment into the pension fund and ensuring further problems:Chris Christie took the coward's way out, a well worn path trodden by every New Jersey governor in recent memory, by punting.
Offering the feeble excuse that "our pension system must be reformed before we can or should fund a broken, out-of-control system" Christie assured that it will remain broken and careen more out of control under his watch. Not only is he skipping the payment, but he's continuing to include the number in his structural deficit calculation even though there is no such appropriation. It's ok though, because he's doing that with the property tax rebates as well to mislead the public into thinking a pretty bad problem is that much worse. Just another day in the Christie administration.
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Thu Mar 11, 2010 at 11:18:58 PM EST
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You probably remember how the New Jersey pension fund invested in Lehman in early 2008: Our Juan Melli thought it was a big mistake, I said "might be a bargain, who knows?" and within months New Jersey lost over a hundred million dollars as Lehman went bankrupt.
When you take that kind of gamble and lose, it's really no one else's fault, unless the leaders at Lehman who convinced the pension fund were somehow committing fraud. The New York Times reports that a new report says it was fraud and there is evidence to support a lawsuit:
But the examiner, Anton R. Valukas, also for the first time laid out what the report characterized as "materially misleading" accounting gimmicks that Lehman used to mask the perilous state of its finances...
Mr. Valukas writes in the report that "colorable claims" could be made against some former Lehman executives and Ernst & Young, meaning that enough evidence existed that could lead to the awarding of damages in a trial. He added that Lehman's directors were not aware of the accounting engineering.
By his reckoning, Lehman managed to "shed" about $39 billion from its balance sheet at the end of the fourth quarter of 2007, $49 billion in the first quarter of 2008 and $50 billion in the second quarter. At that time, Lehman sought to reassure the public that its finances were fine - despite pressure from short-sellers.
There's a lot more in the article. Obviously the money is not going to be recovered, but both for the sake of justice and to discourage future Wall Street trickery I hope New Jersey vigorously sues everyone who knew.
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Mon Apr 06, 2009 at 01:45:00 PM EDT
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First the latest numbers for the State Pension funds from Capitol Quickies:
New Jersey's pension funds lost $2.9 billion in value in February.
The value of the state's pension investments plunged to $56.3 billion as of the end of January, according to the latest monthly report issued by the state Division of Investment. It was $59.2 billion at the end of January, a loss of 4.35% for the month. The pension funds had been worth $77.7 billion when the fiscal year began July 1; the market loss, not counting reductions in the funds' value due to actual pension payments, is 25.5% in eight months.
Those returns reflect the situation at the end of February, but things should look better when the March report is announced in mid- to late-April. The Dow, S&P and Nasdaq are up between 8% and 10% this month, with today the last day in March.
And then the bad news on the Teachers pension fund:New Jersey's unfunded liability in the teachers retirement fund rose almost $3 billion to $15 billion for the 2008 fiscal year from the previous year, the state treasurer said on Thursday.
Actuaries valued the fund's assets at $36.6 billion but the accrued liability is $51.7 billion, Treasurer David Rousseau said in a statement. Wow, a $15 billion unfunded liability for the fund as a whole. The Star ledger offered this:That means if the state were to be asked for all it is obligated to pay right now on teacher pensions, it will come up more than 25 percent short. Payments to retired workers and teachers in New Jersey total $5.5 billion annually, money that comes from taxpayers and revenue from pension investments. Now obviously all obligations won't come due now, but that's still pretty staggering. These funds, along with just about everyone and everything else in the economy, could use a few good months at this point. The hope is over the long term as the economy recovers, the funds will rise along with it, but looking at these big losses each month is pretty difficult to see.
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Mon Feb 09, 2009 at 01:00:00 PM EST
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On Reporter's Roundtable yesterday, Michael Symons offered this stark analysis of the hole the pension system is in:Rough numbers, there is $60 billion in the pension funds and the pension funds have a forecast liability of $120 billion. And that was the December Number. And then January, Senator Barbara Buono was saying the other day, going through all the ways you could measure how bad January was, you know the worst January ever in the 113 year history of the Dow, a 5 month rate of return that is the worst since the 1930s. Our current outstanding liabilities are nearly double. I could see why the unions fear this latest pension deferral. It's going to be hard to climb out of the hole we have already dug.
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Thu Jan 15, 2009 at 10:52:00 PM EST
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There was plenty of wailing and gnashing of teeth when the state pension fund lost many billions of dollars in the wake of the economic collapse. The decision to purchase millions in Lehman stock in June was public information, but few publicly questioned the decision until after the company entered penny stock territory.
Needless to say, it's hardly courageous to question investment decisions with the benefit of hindsight.
All investments carry risk, and what has not been properly acknowledged is that New Jersey's pension fund has outperformed (meaning fewer losses) most other states' pension funds because it's become more diversified and risk averse in recent years. It could have been much worse.
In December 2008, the S&P 500 was up 0.78 percent while the Dow Jones Industrial Average was down 0.6 percent. During the same time, the state's pension fund continued to outperform the major indexes, growing by 6.3 percent ($3.3 billion). Most investors would be thrilled with that kind of performance, but I wouldn't hold my breath waiting for the critics to praise the recent results.
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Fri Sep 12, 2008 at 07:20:13 PM EDT
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In a NY Times article about Lehman and its drastic fall, one finds the following statement about how they tried to survive this summer:
"Management shifted to Plan B, raising money closer to home. One executive, Larry Wieseneck, global head of finance, ended a trip to return and help raise $6 billion from investors including the New Jersey state pension fund."
How much money did the already in debt NJ state pension fund put in this financial folly? What were they thinking?
-pb
The link is http://www.nytimes.com/2008/09...
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