Tuesday, April 13, 2010

Public and Private Pensions � The Quick and the Ed

Public and Private Pensions � The Quick and the Ed

Public and Private Pensions

The Foundation for Educational Choice has a new report today attempting to change the way we treat public pension plans. It essentially boils down to this: States themselves claim their pension funds covering teachers, principals, and other educators, are 78 percent funded, but the authors use different calculations based on what’s expected of private companies, derive another number and poof! the funding ratio drops to 60 percent. They then throw out the eye-boggling stat that states are actually $933 billion in the red due to unaccounted pension obligations.
Don’t believe it.
See, private pension funds are different than public ones, and they should be treated differently too. Private companies are required to contribute, on behalf of their defined benefit (DB) pension plans, to something called the Pension Benefit Guaranty Corporation (PBGC). The PBGC asks all employers with a DB plan to fully fund it so their future obligations are covered in case they ever go out of business or run out of money. When private


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