A careful look into whether CalPERS is ticking along or a ticking time bomb
The $270-billion giant seems more grounded after some investing misadventures, but the unfunded-liability horse may be out of the barn
The California Public Employees’ Retirement System — right up the road from us in Sacramento — has won international acclaim as an investor — for better or worse. Part of what puts CalPERS on everyone’s map is its sheer size at about $260 billion of managed assets. Another part of the picture is that it has always been willing to pay up for careful management of those megabillions — and its transparency about all the moves it makes is truly exemplary. But while the investing public focused on the pitiable state of the 401(k) system, the old 'safe’ system seems to be wobbling its way out of existence. See: Why the industry needs to accept some blame for 'flaws’ in PBS Frontline’s 'Retirement Gamble’. This article and a follow-up article by Lisa Shidler are intended to give our readers a view on an investing situation outside the RIA microcosm but very much within its macrocosm. The zeros on the end of the numbers involved are different but the principles, expense and discipline issues could hardly sound more familiar.
The people who run the California Public Employees’ Retirement System are staring into an abyss as they contemplate past losses realized during the market crashes around 2000-02— cumulative losses of 16% — and 2008, a loss of 28% — and the unfunded pension liabilities that could swallow them whole if decisive, enlightened and seminal action isn’t taken soon.
California taxpayers fund CalPERS’s pensions and ultimately guarantee them — now with $260 billion-plus in assets. But it also has growing unfunded liabilities — pegged at about $80 billion or so by CalPERS (much higher by some critics).
Bringing that number down — and assuring 1.6 million Californians the retirement they were guaranteed without jacking up taxes — depends on whether CalPERS hits its presumed 7.5% investment rate of return over the next couple of decades.
Still too high
This presumption seems too optimistic, and when a more pessimistic presumed rate is applied to projections, a much more daunting picture emerges, according to Joe Nation, professor of the practice of public policy for the Stanford Institute for Economic Policy Research, and a former Democratic state assemblyman.
“The short answer is that a 7.25% assumption is still too high,” he says. “I think a range of 5% to 6% is more appropriate given historical returns. [But] if they assume a lower rate of return, their unfunded liability increases.” By how much? Nation believes that could be north of $170 billion — or more.
If some reason it comes it under that, say 4.5%, that places CalPERS in a scary $290 billion range. “CalPERS typically claims a much lower unfunded liability than actually exists —- precisely because they assume a higher-than-justified investment rate of return,” he says.
Right now CalPERS’ assets are only greater or equal to its 60% of its liabilities, says Nation. By way of comparison, private-sector pension plans are labeled “at risk” if their funded status is below 80%.
The “funded status” is a very unstable number because it’s based on the market value of its assets, and that number changes yearly depending mainly on how its investments perform in the market. After the 28% loss in 2008, the funded percentage dropped to 60%, but it was back to 75% at the end of fiscal year 2010-'11 and should be higher following the 12.5% gain in FY 2012-2013.
Here’s the good news: CalPERS posted a nice 12.5% rise on its investments for the fiscal year ended June 30 — this after a lowly 1% rise the year before. It earned 19% on its publicly traded equity holdings; with the S&P 500 index performing at an 18% rate of return during the same time frame. CalPERS, after all, uses index funds for the bulk (67%) of that investing. See: Regulatory Wire: The public is depressed about financial reform and an exemption for auto dealers is just a warm-up.
“When things got rough, we didn’t panic,” Joseph Dear, chief investment officer of CalPERS, said in a meeting of the system’s governing board in July. “We stuck with our exposure to growth assets and applied the lessons we learned from the past. The numbers show us that our approach is working.”
CalPERS keeps readjusting its goals for some of its investment mix. In June, a decision was made to adjust downward the rate of return assumption of its fixed-income and inflation-linked portfolio. To many, it set in motion a possible bigger decision that could lower its overall rate of return to 7.25% from 7.5% next year. Still, others believe it could result in a just readjustment of its investment mix with no change to its overall portfolio expected rate of return.
A CalPERS spokesman told RIABiz.com the June action might not necessarily lead to big changes: “It was an exercise tied to our asset liability management study that will inform our strategic asset allocation decisions later this year. The board adopted a set of capital market assumptions for each asset class. Individual asset classes are measured against benchmarks; only the total portfolio is measured against our expected rate of return, currently 7.5%.”
CalPERS’ liabilities will be a continued and growing problem, Nation says — something which should scare California municipalities and taxpayers. He doesn’t believe CalPERs can sustain the 7.5% rate, which means that “the unfunded liability jumps to at least a couple hundred billion, likely more.”
The largest 100 public pension funds had around $1.2 trillion of unfunded liabilities, according to a study in 2012 by the actuarial firm Milliman. The same study finds an aggregate level of funding of 67.8%.
Though for many registered investment advisors a 7.5% return rate would be an appropriate return rate for the average investor these days, it is a different story for public pension funds.
Where CALpers $ is going
“The caveat is that the lower your [rate of] return assumption, the more you’ll need to save,” says Michael Kitces, partner/director of research of Pinnacle Advisory Group Inc. “In the context of pensions, changing the return assumption can be harsher, as the moment the return assumption is changed, the plan will immediately show a potentially huge shortfall and compel a huge contribution at once to fund it to the new assumption.”
Investments break down this way for CalPERS for the bulk of its $263.9 billion in assets as of April 30, 2013: 65% ($170.5 billion) in growth investment; 52% ($138.5 million) in public equity; 12% ($32 million) in private equity; 16% ($42.8 billion) in income investments; 9% ($24.5 million) in real assets; 8% ($21.1 billion) in real estate; 4% ($10.5 billion) in liquidity investments; and 4% ($9.8 billion) in inflation-targeted assets.
Like many an individual investor or 401(k) participant, the root of the uphill investing scenario can be traced back to what appears to be a loss of investing disclipline — especially at times when markets were in frothy stages and headed for a fall, like 2000 and 2008. The pressure to jump away from an indexing approach and toward more active and speculative investments can be quite unbearable.
One thing for sure, CalPERS is a long way from the days of just putting all its investments in index funds or bond funds — which seems out of favor among almost all public pension funds. See: Executive leaves Bloomberg with ambitious plan to unify the retail bond market.
“At the end of the day, I’m a big fan of indexing,” says Brad Barber, professor of finance at the University of California, Davis Graduate School Management. “Among academics the jury is still out as to whether it makes sense to make allocations to hedge funds [for example]. I think there is some evidence private equity does add some value. But it’s not clear that it offers market returns as a fair compensation for risk, he says.
!https://www.riabiz.com/i/23789510/b(Brad Barber: I’m a big fan of indexing. How you do you structure financial markets and how do they structure [around] government regulation in a way to to encourage the optimal allocation of capital?
In looking at its 10-year average rate of return, CalPERS was at 7.6% — in 2003 it was up 23.30%; 2004, 13.40%; 2005 11.10%; 2006, 15.70%; and 2007,10.20%. Then in 2008, where the economic downturn started, it lost 27.80%. In 2009, it was back up 12.10%; 2010, 12.60%; 2011, 1.10%; and 2012, 13.10%. But, adding in early years 2000 through 2003, when including rougher, negative return investment years, its average is around 2 percentage points lower, in the mid-5% range.
“If you are cutting edge, you sometimes make mistakes. I’m sure you can find holes,” says Jeffrey Hopson, managing director, senior equity analyst of asset management and investment services at Stifel Nicolaus & Co.
Concerning the seemingly high 7% plus rate of return, Hopson says this needs to be taken into perspective. “There are political implications [for CalPERS]. For a corporate pension plan you would be more critical of that rate.” Hopson says a number of public pension plans might be in the same high-level predicament.
But not everyone is in agreement here. Pinnacle’s Kitces says: “Rates of return have been as controversial in the advisory world as in the pension world, with little agreement on what a reasonable number is to use. I’ve seen advisors using numbers anywhere from about 8% (which is about the ultra-long-term historical average), down to 7% or 7.5%, and some in the 6.X% range.”
The assumed rate of return also depends on the risk taken in the portfolio and the investment strategy taken, according to Robert Boslego, managing director of Boslego Risk Services, a consulting firm in Santa Barbara, Calif.
Typically equity does better than debt (bonds) and private equity beats public equity. CalPERS keeps 52% of its portfolio in foreign and domestic public equities. Compare that to perhaps the most successful publicly known investing effort — the Yale Univeristy endowment under David Swensen. It stays 85% invested in private equity, making — all things being equal — its presumed long-term rate of return much higher than CalPERS’, Boslego adds.
Many CalPERS observers continue to worry that future liabilities could levy undue damage. But it’s not just a change in investment targets that need adjusting. Some are calling for a total transformation to head off a potential catastrophic financial situation.
Some recommend that CalPERs follow the likes of Rhode Island and Utah which moved to a hybrid plan with a 401(k) component. Basically it transitions from a more costly defined-benefit plan to a much lower-cost defined-contribution arrangement.
But is a longshot for California do the same — considering major political and union forces.
Realistically for CalPERS, “Concessions from everyone are required, including current working members,” says Nation. “Many are paying more already, but they are still very short of what is needed.”
Big changes mean less return
In August 2012, CalPERs made some changes — such as raising the retirement age and offering up less in retirement compensation benefits. Nation says at best this might cut down on future unfunded liabilities by perhaps 10%. California cities are still on the hook, which, in turn, means more from taxpayers.
Another alternative could be a plan to let each California institution/public employee group that gains from CalPERs’ pension plans for their employees be directly responsible for their individual costs.
Harold Hellenbrand, provost/vice president for academic affairs at California State University, Northridge, says: “It makes sense philosophically and politically. As an inhabitant of CSU I don’t like the idea, but I can’t critique it. Linking the benefits to the costs, you have dealt with the consequences.” In return, Hellenbrand says, perhaps it might allow institutions to have more freedoms.
Right now almost two-thirds of pension funds’ current retirement payments to members comes from investment earnings. For every dollar of paid to CalPERS’ pensions, 66 cents come from investment earnings, 21 cents from CalPERS employers, and 13 cents from CalPERS members.
Looking ahead, CalPERS continues to explore other investment/funding options, especially when it comes to so-called “sustainability” investment — those that include environmental, social, and governance investment-minded companies. This was the subject of a recent event held by the UC Davis Graduate School of Management.
Not everyone agrees that this kind of investment strategy works. Olivia Mitchell, professor of business economics/public policy and executive director of the Pension Research Council, says: “'Sustainability’ is in the eye of the beholder. Thus what one plan sponsor [or individual investor] ranks highly may not be what another would select as a criterion. Hence, difficult to say overall what impact this approach might take.”
Barber, the UC Davis professor, says the CalPERS conference was not intended to remedy any of CalPERS’ longtime problems — but to offer up more discussion and pose broader investment questions.
“Given the landscape they operate in, [questions arise as to] how can they manage the assets they own and what should they do?” he says. “The other part is — how you do you structure financial markets and how do they structure [around] government regulation in a way to to encourage the optimal allocation of capital? They are struggling with both of those issues.”
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January 12, 2022 – 3:13 AM
Michael Kitces and Adam Birenbaum are now on the same $50-billion Buckingham team after the blogger called the young CEO with a multi-pronged proposal
Kitces is leaving Pinnacle - after 17 years - for fewer conflicts and more opportunity
March 12, 2020 – 1:45 PM
Top Executive: Michael Kitces
European pensions utilize far more conservative investment assumptions than here in the US and as a consequence are rarely in such an underfunded state as here in the US simply by virtue of very conservative actuarial assumptions based on centuries of experience. Because of the nature of retirement assets, such an approach is prudent, a thought that is deemed old fashioned here in the US.
The fact that Mr. Nation points out that aggressive performance assumptions are imprudent should not be scorned, but heeded for his courage in saying so. In fact, Mr. Nation’s comments are considered best practices in other parts of the world based many, many decades of experience.
Its time for you to go away and leave us alone, Mr. Nation. We are all just trying to live our lives and it serves no purpose to brow-beat us day in and day out, about unfunded pension liabilities. CalPERS hasn’t thrown any eligible beneficiary overboard, in it its 80-year history, and it is not going to start now. Find yourself another subject—you have beat this dead horse to the point there is nothing left but a little hide.
The assumptions that went into the design of the system for contributions and benefits decades ago were almost certainly incorrect. The question now is what can be done.
The biggest, controllable variable is how CalPERS invests its capital, since investment returns fund a majority of the payouts each year, on average. CalPERS has a strategic plan and wants to try to provide more targeted returns and enhance its risk management. It might be most helpful and productive to focus on that issue, which has broad implications for investment management, both public and private.
The good news is CalPERS has plenty of capital to meet liabilities for many years to come. Their funded ratio changes based on investment returns, and only about 10 years ago, the system was 100% funded. I wouldn’t expect any immediate problems, but it is imperative that they deeply question their investment strategy, and that is, in fact, what they are doing.
Thank you for your very thoroughly rendered counterpoints.
Mr. Nation is paid by special interests for his “opinion” — let’s make that clear from the start. It’s unfortunate that Mr. Nation fails to disclose that information, and also relies on statistics developed with funding from those seeking to undermine public employees.
If you do, indeed, look at history, as Mr. Nation suggests, you will see that CalPERS 20-year rate of return is 7.7 percent. That includes the massive losses of the Great Recession (which, by the way, CalPERS has totally recovered).
CalPERS and CalSTRS funding levels simply are not as weak as many critics claim.
• CalPERS and CalSTRS each have reported a funded status is about 70 percent funded based on market value of assets, which is regarded by many experts as acceptable. Fitch Rating Agency recently stated that a 70 Percent funded status or above is adequate and under 60 percent is weak. http://www.calpersresponds.com/downloads/key-observations-lh-report.pdf
California’s public retirement systems are better off than they were during Gov. Jerry Brown’s first term in office.
• CalPERS was about 55 percent funded In the early 1980s, the final years of Gov. Brown’s first term and following another severe recession. As the economy rebounded, so did CalPERS funding status. By 2000, the system was 130 percent funded. CalSTRS was about 29 percent funded when Gov. Brown was first elected in 1975, and it increased to 57 percent in his last year in office. As the economy rebounded, so did CalSTRS funding status. By 2000, the system was 110 percent funded. A pension plan’s funded status or unfunded liability is a snapshot in time that can change significantly over the course of a few years, depending on whether the economy and financial markets are strong (better funding) or weak (poorer funding). (http://calpensions.com/2013/02/07/calpers-projects-200-million-state-rate-hike/)
Simply citing unfunded liability tends to promote fear mongering and misleads about the health of pension plans.
• A plan’s “funded ratio,” calculated by dividing the plan’s assets by its obligations, is another way to describe unfunded liabilities. For example, a plan that has $90 billion in assets and $100 billion in obligations can be characterized as 90 percent funded, which sounds more manageable and positive than citing a “$10 billion unfunded liability.” According to CalPERS, “A better measure of a pension fund’s health is the steady progress toward a higher funded status level, not a snapshot in time. Understanding how a plan reached a funded level is more important than the absolute level.” (http://www.calpersresponds.com/downloads/key-observations-lh-report.pdf)
Critics can change variables and assumptions to make the funding status look worse.
• A big variable is the earnings forecast. Stanford graduate students, led by former lawmaker and notorious pension critic Joe Nation, claimed that California’s unfunded liability was far larger reported by cutting the earnings forecast of three state pension funds, then 7.75 percent, to a “risk-free” bond rate, 4 percent. Moody’s Investment Services recently announced that it would lower its assumed investment rate for public pension to 5.5 percent, which is far lower than CalPERS 30-year rate of return of more than 9 percent and CalSTRS 20-year rate of return of more than 7.5 percent, and would cause the perceived unfunded liabilities to balloon.
Defined Benefit plans base investment assumptions on facts, and invest for the long-term.
• CalPERS and CalSTRS discount rate and assumed rate of investment return are both 7.5 percent. This amount reflects historical and expected CalPERS investment returns over the long term, and ensures that today’s taxpayers don’t overpay for public pensions. CalPERS 30-year rate of return is in excess of 9 percent, and 20-year returns are 7.7 percent. CalPERS calendar year 2012 returns were 13.3 percent. Fiscal year returns were 21.7 percent for 2011, and 13.3 percent for fiscal year 2010. CalSTRS 20 year returns are 7.5 percent and calendar year 2012 returns were 13.4 percent. Fiscal year returns were 23.1 percent for 2011, and 12.2 percent for fiscal year 2010.
Funding gaps can be filled gradually, over time, much like a home mortgage.
• A funding gap does not need to be closed in a single year, but the payments can be spread out (or “amortized”) over a number of years—governmental accounting standards permit a pay-down period of up to thirty years. Most people do not currently have assets that come even close to 70 percent of their mortgage obligation. For most states and localities, filling funding gaps will be manageable. Researchers at Boston College project that if total contributions increase by just 2.2 percent of payrolls, state and local governments can pay off the total unfunded liabilities in 30 years.
Rate increases for employers are inevitable and don’t indicate mismanagement or outrageous pensions.
• John Bartel, an independent actuary, said while the goal of actuaries is to reach 100 percent funding, future events are unknowable and the goal is “a movable target” requiring contribution adjustments. He made a comparison with seeing a rainbow while driving in a car. “It’s very difficult to find the bottom of that rainbow, no matter where you go,” he said. “You sort of chase after it. That’s the nature of paying the unfunded liability.” CalPERS is working on changes to its policies to make rate increased more predictable. http://calpensions.com/2013/02/25/as-economy-recovers-calpers-may-lift-rate-lid/ and http://calpensions.com/2013/02/07/calpers-projects-200-million-state-rate-hike/
Defined Benefit plans save taxpayer dollars through smart, long-term investments.
• These contributions are invested, allowing investment earnings to compound over time and shoulder the bulk of the work of paying for benefits. Earnings on investments have historically made up the bulk of public pension fund receipts. Nationally, between 1993 and 2007, 10.3 percent of total state and local pension fund receipts came from employee contributions, 19.4 percent from employer contributions, and 70.4 percent from investment earnings. (http://www.nirsonline.org/storage/nirs/documents/final_factsheet_public_pension_basics.pdf)
I humbly would argue we have long since past the point in time where we could solve the underfunding. Their simply isn’t enough money. The math doesn’t work without increasing contributions and there is no money nor the political will for that.
As a country, we have long since past the point where speaking factually and accurately about a problem is appreciated. Instead, as posters to this very thread have demonstrated, you get demonized for being honest.
Has CalPERS missed a payment? No, but Stockton, San Bernardino, and Detroit never did either, until they did.
You have to admit that Justin Case’s comments were funny but made a point incorporating a fair amount of truth. The state of New York, hardly a conservative state, does not have this problem because responsible businessmen, not pols, provided much needed oversight that is absent in California.
CA CHING, CA CHING, CA CHING! YEAH, IT MUST BE THAT TIME OF YEAR AGAIN! My Union Boss down at the Town Hall emailed me yesterday and.
Told me that this article was hitting the Papers today, and He told Me.
to make it Look like I was Working till this Blows Over in a week. I
know the routine! In a week, I’ll be back to my usual activity of.
Collecting A Paycheck for Doing Nothing! Hey, Private Sector.
Workers; You really gotta Pony Up more Taxes! I need at least a 10 %.
raise! My Cabin Cruiser at the Dock behind my Vacation House in.
Florida needs a New Engine. My wife has been after me for a new car.
She wants a BMW X6 G-Power Typhoon S! I told her I can’t afford that.
car. So then she says she will accept a Mercedes-Benz CL-Class and.
Nothing else! I also got Private School Tuition of $ 40,000.00 due.
in September. I got Credit Card Expenses coming out my AXX! That
new 3000 sq ft extension on my house raised my property taxes $ 15,000.
The maid and the housekeeper want raises. The gardener also wants a.
raise. You see Bunky; It ain’t easy in the Public Sector! So come
on Private Sector Worker; Pony Up and Pay More Taxes so I can afford to.
live here! You See; Life Is Not Fair, and the DemoRats will take.
care of Everything! HAPPY DAYS ARE HERE AGAIN!
I cannot ever take Justin Case, aka Eating Dog Food, and aka Dubois H.S. seriously. He/she is a troll who writes fake anecdotes—posts the same ones, on every blog, on every site. He/she is probably, IMO, a paid troll.
I think nobody is as knowledgeable on the public pension problem as Joe Nation. The idea that somehow he is being funded by nefarious interests after his years as a very left leaning politician is somewhat comical. However, this article and just about every article seems to miss the biggest point.
Specifically, that the whole public pension system in California was never honestly funded in the first place. The actual historical investment returns by CalPERS and CalSTRS are very close to what they have used as a estimated return. Whether that number is too high going forward is beside the point. Since they hit their numbers, why are they so short?
The only logical explanation is that the formula’s to determine how much was contributed were never honest. The only way this is going to be fixed going forward is properly fund the system, which means contributing sufficient amount to cover the growing liabilities, including a massive capital injection for the already accrued liabilities.
However, California simply doesn’t have the money, nor can the state raise taxes without driving out even more people and businesses out of the state. So what is the answer? I don’t see one.
When the investment officers and actuaries of CALPERS bring the underfunded status of CALPERS to the attention of the Governor and Legislature of California, those politicians duck the issue every time, where in business those issues have to be managed in order to maintain solvency. This disconnect of politicians to economic reality that should temper legislative spending habits is not a good thing. Even if voters temporarily enjoy that sense of social justice and entitlement, they do not recognize that California is engaged in self defeating behavior that ultimately make it a pariah with a high tax rates and unattractive climate for business.
Congress will not bail out California as you cite California’s obligation to support CALPERS. None of this is good for California. But it is terrific for Virginia an other conservative states which have not let political ambitions advance entitlements beyond the states ability to pay. Only the Federal government can print money and we still have a democracy in which the majority of states which are fiscally sound would never put their tax payers at risk for bailing out the imprudent spending habits of California politicians who were never concerned about how to pay for entitlements.
If America is in decline it is because the cost of good intentions is beyond our ability to pay, and the political class does not have the courage to right the once mighty ship of the USA.
Stockton never missed any CalPERS payments, as I understand. San Bernardino missed a year’s worth of payments—but, to date, none of that has translated into any missed payments for San Bernardino’s retirees.
I think the retirees must decide whether, to take seriously, the scores of pension-bashing articles by alarmists such as Joe Nation, and be in a continual dither over whether or not their pensions will remain secure, or, instead, trust the investment officers and actuaries of their pension plan, CalPERS, in this case. I choose the latter position.
Stockton, San Bernardino, and Detroit all have failed to pay bills. That is why they are in bankruptcy. By the time it gets that far, it is too late. For CalPERS and CalSTRS, it is already too late. They are too underfunded. Eventually they will miss payments, too, and the taxpayers will be on the hook for those payments, which are protected by law. While that is likely decades out, it will happen eventually. Especially when you factor in that the retiree healthcare payments are entirely unfunded. Not one penny has been set aside for those.
All this is predictable as Joe Nation suggests. In the absence of principled industry leadership, feined ignorance will persist until everything blows up and then a federal bailout will be requested as a solution to a problem largely based on incompetency. Joe Nation begs us to simply assess the problem while there is still a chance to turn things around. The truth is there is not enough money to bail out every underfunded state and municipal pension plan.
Joe Nation simply asks is anyone paying attention and if so is any responsible person willing to acknowledge the problem with the courage to actually advance a remedy. It used to be the American way to take charge and solve problems. That is what made America great. Today, we have forgotten how to speak factually and frankly, problems are not solved with the hope they will go away. Problem solvers that speak the truth are deemed unfashionable, thus slowly killing the American ingenuity that made America great.
Very sad state of affairs.
Speaking of accounting principles, unfunded pension liability is now being reporting in governmental financials—more than just a reminder, an obligation.
I suspect over the next 10 years 4-4.5% annual returns will prove a daunting challenge. I guess we’ll see how all these arrangements play out. My hunch is that we’ll get at least one more can-kicking initiative on the “assumed liabilities” side blessed by the accounting boards (and backed by other interests) before then.
Most of these increase in value of Calpers investments are based on stock prices and not an increase in income to the fund….Assets go down if too many investors want to sell them…So this rise in value is only valid if other investors hold on and keep there stock and buy more..Most of this is only paper profits and is very artificial. Actual wealth created by stock price increase is only valid if stocks are sold for the increased price…
My concern is how are calPERS members allowed to retire before the age of 59 1/2 as is required on a standard 401K without paying the 10% Fed and 10% state tax penalties imposed on the general public, unless you become permanently disabled. Many of us who work in standard industrial or commercial jobs, must abide by the 59 1/2 years old rule to start to draw on our retirement, even if we have worked over 37 years at various full time jobs during our life. If we choose to retire before 59 1/2 years of age, we are required to pay the 20% tax penalty each year we collect. The retirement age of 59 1\2 must be uniform for all, no matter if you are a federal of state employee. You are no better then the average American citizen. As America’s, we all pay taxes, we all pay into some type of retirement such as 401K’ s, Social Security or calLERS type of retirement. No one should be given preferential treatment an allowed to retire before 59 1/2 without paying the same penalties or tax burdens.
Joe Nation is not only right, he is rightous. I don’t know who is arguing with him, but whomever they are, they are probably the California public employees that Justin parodies. BTW, Justin, use your real name.
When public employee participants tell me that their fund “is all the way back”, I always remind them to look closely at their statements. Usually I find that the way these pensions get “all the way back” is by increasing the mandatory withholding. Sometimes it doubles.
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