For Immediate Release
Contact Joe Gimenez, 713.478.8034
January 13, 2012
HOUSTON (January 10, 2012) - The Texas Association of Public Employee Retirement Systems (TEXPERS) today issued a Special Report in a new series of papers dedicated to debunking the myths of public employee pensions.
The first report, "Fact and Fiction in the Laura and John Arnold Foundation's [LJAF] Solution Paper ‘Creating a New Public Pension System,'" responds to several assertions that are false and misleading to the general public and policy makers.
The TEXPERS paper corrects the LJAF paper's grossly overstated assertion about unfunded pension system liabilities in the United States by citing the most commonly used actuarial method recommended by the General Accounting Standards Board (GASB). The figure given by the LJAF paper is more than four times the actual amount of $700 billion using the GASB method.
"TEXPERS wants to promote responsible discourse on these sorts of public policy matters," said Max Patterson, the executive director for TEXPERS. "Overstating actual liabilities is like yelling ‘Fire' in a crowded theater when in fact there is none. The effects could be misplaced pressures on system managers to take undue risks in their investment management to satisfy politicians. This would be an unintended effect but it exists nonetheless and is dangerous."
The TEXPERs paper also corrects the LJAF prescriptions to replace defined benefit (DB) plans with defined contribution (DC) plans that put the burden of investment decision on employees.
"We know that where DC plans have been tried, they have failed by increasing investment risks, adding administrative costs that reduce returns, and reducing the amounts of funds available for investment and retirement," Patterson said. "We are concerned about the effects that poor retirement systems, like DC plans, might have on public welfare rolls when poorly prepared public employees run out of money in retirement and need to enroll in various forms of public assistance."
The full TEXPERS report is available at http://www.texpers.org/documents/Debunking-the-Arnold-Foundation-Report.pdf .
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The Texas Association of Public Employee Retirement Systems (TEXPERS) is a statewide voluntary nonprofit association that provides education and advocacy services to the Trustees, administrators, professional service providers and employee groups that manage the retirement money of police, firefighters, municipal and district employees in cities across Texas. Today, TEXPERS' member systems represent approximately 300,000 active and retired participants and over $22 billion in assets. Learn more at www.TEXPERS.org or www.TEXPERS.blogspot.com.