The more I read about the pension situation in this state, the more I think the state should get out of the pension business all together. Maybe I'm too young to understand when this idea eve made sense, but the idea of one group of taxpayers being responsible for the retirement security of another group of taxpayers does not make any sense to me. I don't want that kind of responsibility - financially or otherwise. We should all be responsible for our own retirement security by saving and investing for it.

The govt. does a very poor job "spreading the wealth" and an extremely good job of spreading the poverty. Witness social (in)security and the pension plans. These are shell game financial structures with unrealistic funding sources. The chickens are coming home to roost.

What exactly has this "greatest generation" wrought?

I don't think it's "The Greatest Generation" but the Baby Boomers who have their fingerprints on this mess. The people of the WWII generation lived within their means, worked hard and contributed to the nation in numerous ways.

And who raised the baby boomers?

More airtight logic there. The problem that Monique fails to grasp is that there are concerns related to short-term performance and concerns related to long-term performance.

For those near retirement or in retirement, events such as the Bush recession can be devastating, exactly why pensions spread that individual risk across a large pool. However it's a mistake, foolish even, to suggest that funds be managed as if short-term performance is the appropriate metric.

Since 1930 the DOW has returned something like 11%. Granted pension funds should contain a mix of investments, but there is some logic to the idea that the current assumptions are too conservative for long-term planning.

"For those near retirement or in retirement, events such as the Bush recession can be devastating"

So a two-year slump is devastating? The DOW is still up 23% over the last ten years, and up 1300% since a worker retiring today started.

If your retirement plan can't handle a five-year 10-15% hit, then you're doing it wrong. The people who were 'devastated' by the recession were the bozos who pulled-out of stocks -after- they crashed; they didn't get the ride back up.

Also, that's why there's Social Security. SS is supposed to be the 'backing' for the ups-and-downs of retirement plans. As far as I'm concerned, the market can be as wild as it wants as long as Social Security is making sure nobody can't put a roof over their head.

Russ,
How about we take a look at the Nikkei225, the Japanese version of our Dow. In 1989, it was @ 39,000. Today?...8600.
So, in 22 years, that index is down 78%.
They've also had a 0 interest rate policy for years.
Do you really think that that couldn't happen here?
No matter how much you want to diversify, the fact is our stock market remains far and away the most liquid and the major market of scale given the amounts of money we are talking here in term of pension assets. Bottom line, you are not going to shield your returns from what happens to our markets.
That 7.5% could very well prove to be wishful thinking. It's time to buy a clue here, Russ, the world has changed - dramatically! Deal with it. Simply showing a positive return just might prove illusory.
Something on the order of 5% is probably more reasonable, given the economic headwinds worldwide. Do you even want to guess how big the axe would be using that figure?? Raimondo's plan could very well end up being a huge gift to illiterate pigs like Valletta - in the short term.

Quick, Monique, sell all of your bonds. Equity markets outperform them on average. Not further thinking required!

"So a two-year slump is devastating?"

It is if you're forced to sell at that time. What's funny is you actually make the argument that professional management (e.g. in a pension fund) is safer than leaving it to "the bozos." I agree. Mike points to the lost decade in Japan, exactly the concern I'm talking about.

But what I said was "some logic to the idea that the current assumptions are too conservative," not that I shared the opinion that Raimondo is cooking the books (I've been a Raimondo supporter and am inclined to agree with her on financial planning matters like the appropriate estimated rate of return).

Yeah Russ, lost "decade". More like 22 years, with no signs of abating. Unless you see signs of lessened turmoil... I mean they only had a massive nuclear meltdown that threatens them due to a tsunami. I guess in your progressive wisdom, that constitutes a lot of "stimulus spending", huh?
How about the poor Japanese guy who was 50 years old in 1989 and had $500,000 in his pension. Here it is and he's 71 and that has been reduced to $110,000, assuming he didn't take any distributions. Real rosy picture.
Your mathematical, economic and financial awareness is non-existent.

"two-year slump is devastating... if you're forced to sell at that time."

Aren't individuals able to not sell at that time, opting to 'lay low' on spending or continue working for a little longer? It's the guaranteed-benefit plans that are 'forced to sell' regardless of market conditions.

Between 2 years of unemployment benefits, various other social programs, and Social Security, I see no reason why even the laid-off 62 year-old would be 'forced to sell' their retirement assets during a recession.

Meanwhile, underfunded plans wherein the retired members have 'property rights' on contributions that must be made by current members and taxpayers, they're forced to liquidate at inopportune times.

Out come the personally attacks from those with little else to say (what a shock). For someone who knows so much, you'd have thought you'd be familiar with the term "lost decade" in reference to the Japanese fiscal crisis of the 90s/00s.

en.wikipedia.org/wiki/Lost_Decade_(Japan)

You also seem totally confused about the difference between defined benefit and defined contribution plans.

"Aren't individuals able to not sell at that time, opting to 'lay low' on spending or continue working for a little longer?"

Yes, in fact that's what happens. So long golden years... hello greeter at Walmart.

As for underfunded plans, that's an argument for not underfunding them, not for pushing all the risk onto individual retirees.

Defined benefit or defined contribution....there is no difference in the sense that they both need to have assets and a return to be able to pay the beneficiaries a given amount for a given period. They are all investing in the same things.
Or, are you like the union dopes that think a DB plan means it all doesn't matter - just pay me?

Russ - Your logic is completely backwards. 401k systems are more equitable because everybody is in the same boat based on how the economy is doing (i.e., economic reality). Defined benefit plans just insulate a small group of publicly-employed citizens at the expense of everyone else and make these grand collapses, such as in Rhode Island, more likely. As other people have pointed out, unless somebody is a total idiot, in which case they deserve to go bust, they will switch over to less risky investments as they near retirement. The Federal government realized all this and switched over 25 years ago, and it works perfectly fine today. Nobody who worked for the EPA or the DOJ is going to be a "Walmart greeter." You can stop with the parade of horribles because the only freak show is Rhode Island and other failed progressive states while the rest of the country is responsibly adapting to reality.

Also, Russ, where is all this magic money supposed to have come from to fully fund the pension system? The amount of intellectual dishonesty used by progressives in these arguments is appalling. When you claim that the state should have fully funded the pension plan, all you're really doing is saying that the state should have underfunded other programs that the money was used to fund. Even soaking the rich with 90% tax rates wouldn't cover the unfunded liability, so which RI public programs would you cut first? This should be interesting.

"Yes, in fact that's what happens. So long golden years... hello greeter at Walmart."

I would much rather ride-out two years drawing-down as little of my own saved money as possible and waiting for the market to stabilize than have my retirement be at the whim of some government commission.

People didn't save for retirement, virtually none saved appropriately because the generation that's retiring now is the one that has exhibited the least fiscal sanity in the history of mankind. I know, instead of a retirement plan, my parents have several hundred thousand dollars in mortgage debt. That's their own fault, but I'm going to have to make it right for them.

Also, a well-funded 401K at retirement is going to be something like 20X a person's annual income. If the market tanks 2008-style, it will still be 9X their annual income, and they can safely draw a cozy 1X chunk down while the other 8X recovers back to 16X their income and future draw-downs are lowered to 80% of expectations instead of 100%. The only reason the crash would be 'devastating' to a retiree with a 401k would be if they were underfunded (which most people are) or if they get panicky with their money (which most people do).

Then there's still the Social Security backing, which provides barely enough for retirees who acted irresponsibly their whole lives to still get by. That's a Good Thing, it's the 'defined benefit' plan we need to enable individual 'defined contribution' plans to be viable. We also need to shore-up and fix Social Security, though.

"People didn't save for retirement, virtually none saved appropriately because the generation that's retiring now is the one that has exhibited the least fiscal sanity in the history of mankind. I know, instead of a retirement plan, my parents have several hundred thousand dollars in mortgage debt. That's their own fault, but I'm going to have to make it right for them."

You aren't kidding. I can't even tell you how many people I work with who are GS13/GS14, 67+ years old and working indefinitely - and they got in under the old, unsustainable defined benefit pension system. Every one of them blew through their savings earlier in life on a way-too-big house or a ridiculous business venture. One guy told his boss to go f himself and quit back in the 90's to start a book store. You can guess how that turned out - he's back with the Agency now, spreading his malcontent union poison everywhere, badmouthing the management, and grieving up a storm. He was also responsible enough to put on 100 pounds in his absence, so he now suffers from a range of medical disabilities like bad back and type two diabetes, which the taxpayers now mostly pay for. Rudest and most entitled person you will ever meet - but *my* generation is the problem because we don't show respect. I wonder why?

Russ's heart is probably bleeding as he reads this. WHY HAS SOCIETY FAILED THESE SENIORS?

I'm of the mind that we are pretty much right where we need to be with retirement, and only tweaking is required:

It's true that most 401ks are woefully underfunded. It should be a statutory default 'setting' of 401k plans to have an 8% employee contribution and they should only be offered as 'opt-out' services.

Social Security needs some tweaking to keep it from hitting the federal budget so hard and to keep it solvent forever. Raise some ages, eliminate some caps, test some means, whatever.

Once a the boomers and the Gen-Xers who didn't save are made examples of, piddling away their retirements in concrete towers, people will get the idea that they should save.

Treasurer Raimondo should publish a white paper on projected vs actual return for RI pension plans for the past 20-30 years and also market rate of return for various investment strategies - from aggressive to conservative.

I think that would be most enlightening. And if over the past 20-30 years, RI's rate of return was sub-par, then why should we expect it to change over the next 20-30 years?

Progressives-dumbest f**** on earth.
Still convinced that by printing untold trillions of phantom dollars and perpetuating an unsustainably lavish social welfare scheme open to anyone in the Third World who can sneak into the country something other than complete economic collapse will result-just mail the bill to "da rich".

"A Hard Rain's Gonna Fall"
B. Dylan

"Nobody who worked for the EPA or the DOJ is going to be a 'Walmart greeter.'"

You sure about that? Most folks I know are one illness away from losing everything. Not sure how old you are, but as your parents get older you see how little security most folks have, even those fairly well off in their working years.

You folks can pretend that it's only the "irresponsible" who need be concerned, but I know that's not the truth.

"Most folks I know are one illness away from losing everything"

Because they're leveraged out to hell. Nobody can take away anything that you own outright, and nobody's putting a gun to anyone's head telling them to get a mortgage that consumes 40% of their income and two car loans.

The average American right now will do anything possible NOT to live within their means. They'll gladly avoid savings and put themselves into debt several times their annual earning potential if it means they can acquire the car or the house or the TV they feel they deserve.

This is my problem with the '99%'ers. You imagine that if the top 1% was sharing the gains more fairly, the Middle Class would be fine. I imagine that they'll just act like drunken sailors. That said, I would like for the income distribution to return to something more fair, I'm just not sure how to get from here to there while respecting our cultural values.

russ-I have no house payment,no car payment,I don't carry a balance over on a credit card(it's mainly for online purchases),and my wfe and I have always lived within our means without being cheap and we've always had some to contribute to those less fortunate.OK?No-I realize I'm the f**kin'xenophobe,corprorate shill scumbag who wants to suppress poor people.
Personal responsibility is not an out moded concept.
I am lucky(??)insofar as I never again have to pay a cent for medical treatment because of being f88ked up by Agent Orange in Vietnam-I just lost my ability to walk unaided permanently and I'm in a really bad attitude-I was 65 yesterday and my birthday gift was a disabled sticker for my car.I will not apologize for the free medical care-I gave the US a blank check on my life when I was 18 and they cashed in part of it-at least I did better than my friends who I left there or who died later on.For that I thank the Creator.
Maybe if you'd ever walked the walk I'd have some time to take you seriously.
BTW I still pay a nice premium for my wife's health insurance because when she retired from a non-profit they gave her NOTHING for health care.
Have a nice Thanksgiving-really-no sarcasm-and just think that a lot of people -much,much,better than me gave something up so you could.
You could even thank OTL-he served his country too.