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Unions try to use stock market returns in good years to deflect attention from a growing pension crisis.
Steven Greenhut writes:
California’s fiscal watchdogs are bracing for the forthcoming press statements from the nation’s largest state-run pension fund, and from the public-sector unions that depend on the system to pay their members’ generous retirement packages.
Expect something to this effect: “The California Public Employees’ Retirement System’s investment earnings for the fiscal year ending June 30 were above 9 percent, reconfirming the health of the state’s pension system—and debunking the naysayers who claim that unfunded pension liabilities will obliterate municipal and state budgets.”
There’s no question that many investors will see returns approaching or even exceeding double-digit levels for the recently completed fiscal year, as the stock market has done exceedingly well in recent months. A pension crisis? As police officers often say at the scene of an accident, “Keep moving, folks. Nothing to see here.”
Californians need to temper the glowing statements and shrug off the efforts to keep us from looking too closely at the wreckage. Of course, impressive stock-market returns are a good thing that reduce the amount of taxpayer-backed pension obligations. But one good year doesn’t fix a problem that has been two decades in the making. For perspective, CalPERS’ returns for the previous two fiscal years were 0.6 percent and 2.4 percent respectively.