We keep hearing a lot from our City Leaders about the ‘Huge Unfunded Liability’ in the Pension Plan. They make it sound like a group of pensioners are sitting on the front steps of City Hall demanding some insanely huge pile of money RIGHT NOW!
No. They aren’t.
No. Pensions don’t work that way.
Yes. There is an Unfunded Liability in the current Pension Plan. There always has been. And unless or until the Market starts returning very high double-digit returns there always will be an Unfunded Liability in the Pension Plan.
Don’t believe us? Read this little explanation from the Public Pensions Online website.
Two of the highlights from the linked article:
Florida local retirement plans covering police, firefighters and general employees are not underfunded. They do have an unfunded liability. There is nothing intrinsically wrong with having an unfunded liability.
and
Local government plan sponsors do not have to take drastic and immediate actions to reduce or pay off the plan’s unfunded actuarial liability….
That last one kind of goes against the message the Commissioners were using last year with the Special Referendum, doesn’t it?
Read through the article. Get the word out. Share the link with anyone and everyone and let them see for themselves. It is a Pension, not rocket science. Don’t let them spin the message to their own ends because it is our ends that have worked for those very same Pension benefits.
Special thanks to Brian Wilke for providing us the link used in this article.