Archive for January 24th, 2014
Act Now to Ensure a Solvent Colorado Public Employee Pension Plan
Posted by Joshua Sharf in PERA on January 24th, 2014
My introductory at-bat in the Independence Institute’s lineup at the Greeley Tribune:
The assumption of a 7.5 percent return masks considerable risk and volatility. Although catastrophic market years such as 2008 have historically been rare, smaller routine losses are to be expected. Those losses can force an already-underfunded system to eat its seed corn by paying benefits out of assets that should be earning returns.
As a result, considerable risk exists that in the future, the state will still need to cut benefits to those who are already retired, to raise taxes, to cut services, or all three.
There is a way out.
I suggest three reforms that would help solve the problem. We’re no longer in a budget crisis. The Democrats’ passion for spending every last dime that comes in on new programs that will cry poor in the next recession may fix that. In the meantime, though, now would be a good time to fix this.