Pension Plan Update
In a prior post below, I commented on NJ's unfunded pension liability. In a subsequent update, I calculated that the "official" figure of $12.1 billion should be at least $5 billion higher. It turns out I was an optimist.
An article in yesterday's NY Times included a brief section on how NJ's pension situation affected the upcoming budget. In the article, Orin Kramer, the chairman of the council which oversees the pension funds, provided some additional infomation:
"Mr Kramer declined to put a number on the deficit in an interview last week. But recently, using more conservative assumptions about the return on investments than the governor's panel did, he estimated the deficit at more than $30 billion."
That's "Good News #1".
Here's "Good News #2".
The estimation of future pension payments is fairly straightforward compared to the estimation of future post-retirement health care benefits. The current "official" estimate of NJ's unfunded health care liabilities is at least $20 billion. Given the uncertainty of the unfunded pension liability, who wants to place a bet on the real number for health care? $40 billion anyone?