This posting includes a Letter to the Editor of the Wall Street Journal that was submitted by the National Association of State Retirement System Administrators ( NASRA )President Michael Williamson. This is in response to the latest article perpetuating the faulty findings of Northwestern University Asst. Prof. Joshua Rauh’s most recent paper on public pensions.
October 14, 2010
The Wall Street Journal
The Journal’s October 13, 2010 article, “Cities Hide Pension Liabilities, Study Says,” is but the latest of many recent news stories to accept at face value a report that is fundamentally flawed. A simple fact check or opposing opinion would reveal that the study’s dramatic and improbable conclusions regarding the solvency of public pension plans are based on unrealistic assumptions and methods unsupported by current practices or documented experience.
One assumption driving the report’s findings is that through 2020, governments will contribute nothing to amortize past pension liabilities. This supposition has no basis in fact, as most governments have a history of paying all of their required pension contributions. This and other fallacious assumptions used in the report would produce similar, disastrous projections for any sector of the economy.
In the wake of the Great Recession, states and cities are examining and adjusting pension benefit levels and financing structures to restore reserves and sustainability. Hyperbole and distortion, as presented in this study and repeated in the Journal, are not helpful in these efforts and only serve to mislead readers.
President, National Association of State Retirement Administrators
Director, North Carolina Retirement Systems