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Colorado Teachers: Your Pensions Are Not Safe


Yesterday Colorado’s Public Employees’ Retirement Association voted to scale back its expected rate of return on investments from 8 percent to 7.5 percent. Miami Herald:

The Denver Post reports that the fund has $23 billion in unfunded liability. That’s money it owes to current and future retirees over the next 30 years but does not have in its account today […]

Stapleton estimated that Friday’s vote means the pension fund’s unfunded liability will increase by about $6 billion to $29 billion.

There are several pieces of bad news contained in this story: the new assumed rate of return is still very aggressive, and the pension fund now has unfunded liabilities of almost $30 billion… if everything goes right! Bottom line for Colorado teachers and others covered by this system: your pensions are NOT SAFE.

Your union leaders and state officials will try to reassure you, but their interests are not the same as yours and, like their counterparts all over the country, they are ready to sacrifice you on the altar of their own ambition. They want you to pipe down and shut up; by the time the inescapable problems erupt, they will be long gone. You should begin, immediately, to save aggressively so that your private savings can help offset any shortfalls.

[Money vortex image courtesy of Shutterstock]

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  • JDogg Snook

    Someone needs to explain to me how such a large number of people can still think pensions are “safe”. Is it some sort of ideological blindness? Is it ignorance? (on their part? on my part?)

    Whenever I talked to people this, I fail to convince them of four points:

    1. Private property (as guaranteed by the US Constitution) has much, much stronger protections than “promises”.
    2. If they think (those evil) 401k’s are “risky” because most money is invested in the stock market, then they would be shocked to learn how their pension money is invested (to say nothing of the fact that an individual can move his/her 401k money out of stocks overnight).
    3. For private pensions, you assume the additional risk if the company goes bankrupt.
    4. For public pensions, you assume the risk of inadequate contributions, municipal bankruptcies, etc.

    Now, maybe folks see pensions better than 401k because of who contributes the lion share of the money, I don’t know.

    • Dexter Scott

      They think their pensions are safe because they belong to a powerful union that has a long track record of successfully influencing politicians to extract resources from the taxpayers on their behalf.

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