Californians for Retirement Security has blasted a new study that estimates public pension obligations will cost American households nearly $1,400 per year for the next 30 years. (We told you about the study in this Thursday post.)
The union coalition e-mailed a response to The State Worker this morning that we're posting here, unedited:
Friday, June 24, 2011
To: Jon Ortiz, Sacramento Bee
From: Californians for Retirement Security
Re: CRS response to Rauh Novy-Marx Study
Here is a response from Dave Low, Chairman of Californians for Retirement Security, to the questionable projections in the Joshua Rauh and Robert Novy-Marx Study referenced in the State Worker Blog:
"This new study is based on unrealistic assumptions about the growth of the economy and questionable projections about public pension funds. The conclusion that a tax increase is needed to pay for pensions is pure fiction, and amounts to nothing more than a cheap scare tactic. There is no requirement that pensions be funded at 80 percent, and there is no requirement or financial argument that funds must be raised to pay any additional contribution this year. Pension funded status is not a static number, it fluctuates with the market, demographics, benefits and employee and employer contribution levels."
Meanwhile, Keith Brainard, of the National Association of State Retirement Administrators, also takes the study to task. http://www.nasra.org/resources/RauhResponseFinal.pdf. According to Brainard: "By vastly underestimating states' projected future contributions to their pension plans and their expected investment returns, the paper draws dramatic and improbable conclusions regarding the plans' solvency. The paper further ignores reforms already underway in the states that will restore sustainability to a far greater degree, and with far fewer costs and disruptions, than those proffered in the paper."