Pension Problem Based on More than Slight Undersight
The talking point of local unionists and ostriches is that our pension system is in trouble because a few years of low contributions in the ’90s threw everything off, and all we have to do is to maintain funding for just a couple of decades, and the whole thing will work itself out right. That diagnosis is wrong, according to a panel convened by the General Assembly:
Even if the stock market rebounds next year, the cost to Rhode Island taxpayers of providing some of the most generous public employee pensions in the region will shoot from $370.9 million this year to a projected $836.3 million by the year 2017. …
… [Chief of Staff for the General Treasurer Mark] Dingley said the state is paying today for past mistakes, including decades of unfunded benefit increases, inaccurate actuarial assumptions, and earnings that have failed, over the last decade, to meet the 8.25 percent assumed rate of return on investments.
Despite union arguments to the contrary, he produced a letter from the actuaries that said the deferral of state contributions in the early 1990s has played a relatively small part. Had there been no deferral, it said, the state’s required contribution this year would be 20.53 percent of payroll, instead of 21.13 percent.
Just another bomb waiting to go off in Rhode Island, with a fuse that nobody’s willing to stamp out.