May 19, 2012
Lurie on Government Pension Problems
Alvin Lurie has recently posted on BenefitsLink called, "Can Peter's Sponsor Borrow From Peter To Pay Peter?" The intro:
Whose skin is in the game when pension plans make loans to plan sponsors to pay pension contributions, and is the answer different if the plan sponsor is a government body?
Those questions come to mind on learning that last year the highest elected officials in New York State authorized financially distressed local governments in the state to use a problematic borrowing scheme to defer a portion of their pension liabilities, by, in effect, borrowing from the state pension system to satisfy significant percentages of contributions owed to the pension trust for the retirement benefits of their respective employees. In fact, more than just permitting its municipalities to engage in this financing scheme, the state itself went to that same window to cover a portion of its own pension liabilities. Some observers have called it "irresponsible." The more pressing question is whether it is legal or just a skin game.
Lurie provides a lot of info on the issue, so check it out.
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