Even with very low rates of return the FRS is still solvent for many years, and is not ready to fall into the abyss of tax pay funded bailouts. Retired workers in Florida do not get a check from the Florida tax payer, the check comes from the FRS, which is a separate investment account. Until the FRS runs out of its 120 Billion + dollars the tax payers need not worry about the public employee leech sucking all of the money out of their bank account... Our so called elected representatives will do much more damage to the state and the tax payers bank account by then.
The average retired employee or even the ones getting ready to retire will have their retirement. Current trends could affect employees with more than 15+ years to retirement. That is if our national leaders haven't collapsed the whole system before that time.
On an economic/actuarial basis, the current projected ROR (rates of return) and the recently requested attempt to invest in more risky assets to meet the ROR needs of the FRS are not only overly optimistic, they are disingenuous to members of the FRS.
The smoke and mirrors used to pretend that the FRS is sound are feckless, and, if allowed to continue, WILL result in FL becoming the same as Illinois, NJ, and NY's pension financial abyss. FRS needs an adjustment to more realistic expectations of the market returns.
The administrators of the FRS are deceiving not only taxpayers, but also members of FRS in the long run.
Exactly. If the FRS and other public pensions were subject to the more realistic return GAAP standards which private pensions are, the public pensions would appear even more underfunded. The Madoff return projections used by public pensions is nothing more than a scam. Amazing how public employees keep drinking the Kool-Aid.
Please, the Florida FRS pension system is rated as one of the top 10 sound pension systems in the world.
It is in very sound shape and is in NO DANGER of failing.
Why do you think Rick Scott and the Republicans want to get their hands on it? Because it is sitting there with all that cash, over 120 billion dollars that as of now they can't touch. But if they create the appearance that it is in trouble they think they can change the laws and change the pension system so they can get their greedy hands on all that money.
Leave the FRS pension system alone, it works and is in NO TROUBLE.
[quote="Guest"]Exactly. If the FRS and other public pensions were subject to the more realistic return GAAP standards which private pensions are, the public pensions would appear even more underfunded. The Madoff return projections used by public pensions is nothing more than a scam. Amazing how public employees keep drinking the Kool-Aid.[/quote
Well my Kool-Aid pitcher has 120 billion reasons why I keep drinking. All you so called money experts that come on this board and post comments like the intellectual’s you think you are have never once explained the 20+ years the FRS has been around, it continues to make money and stays funded. Prior to the Wall Street fiasco in 2008 the FRS was over 100 percent funded, and even with all the financial crud it is still in the high 80’s. The whole financial market is struggling but all of a sudden the FRS is on the verge of going belly-up and breaking the State Budget.
The sky is falling isn’t it Chicken Little.
Unfortunately, you are a victim of the enigmas of economic illiteracy. The FRS is UNDERFUNDED, based upon the future needs for payouts. It is currently not actuarial sound.
The fact is that in the past 4-5 years, the stock market has had an ANNUAL AVERAGE NEGATIVE RETURN. NOT ONLY HAVE NO GROWTH OF PREVIOUS VALUES OCCURRED, FRS IS BELOW ITS REAL, INFLATION ADJUSTED VALUE FROM 4-5 YEARS AGO (when accounting for the additional CONTRIBUTIONS that have been added to it)-- IT HAS MADE NO GROWTH DURING THE past 4-5 YEARS. That is hardly a favorable profligate position for a pension fund that impacts many thousands of past, present, and future employees of the State.
If you want to fight economically knowledgeable professors and practitioners, feel free to be blinded by the B. "Made-Offs" of the world AND fool yourself. We may be thought of as curmudgeons. However, that characterization may be better than your engagement in acrimony with Ph.D economically educated observers when you are telling them that they are incorrect based upon your lack of authoritative, historical, factual data, and sound economic and financial theory. Only a hubris fool would play that hand.
Dear Mr. Oops,
You still did not answer the original question about the long history of the FRS being solvent and exceeding expectations. I am aware of the current financial crisis the our elected officials have put us in and all financial area have been struggling since 2008
But the truth is the actuarial assets of the FRS defined benefit plan exceeded the actuarial liabilities of the system from 1998 through 2008. I am aware of the current financial crisis that the bankers and elected officials have put us in. Most all financial areas have been struggling since 2008. Like all investment funds the FRS does better in some years than others.
However, you just keep preaching on the bad years and totally ignore the good ones....typical.
Only a real fool would say that the Florida FRS pension fund is in trouble and failing. The facts do not back up the doom and glum crowd.
The Florida FRS Pension fund made money last year to the tune of hauling in a 14% return on its investments.
Further it does not have to be fully funded because it is impossible for everyone to draw from it at the same time which is what would have to happen for it to fall short.
Those in the defined benefit side if they retire early are not eligible to start drawing from the FRS until the reach a certain age and then they are penalized for each year they retired early.
But don't let the facts stand in your way of trying to spread your lies about the Florida FRS pension fund being in serious trouble and may collapse any day now.
The real fact is Florida has done things right and the FRS pension fund is one of the top ten funds in the world it is so strong.
There is no political conspiracy, the math shows that the stock market would have to have a 14% average annual return over the next 10 years in order for the FRS to earn its stated goal of 7.75% (after fees) avg. annual return over 20 years. If you believe that the 14% average annual return will show up over the next 10 years, you also believe in the Tooth Fairy and Easter Bunny.
You have no idea of what you are talking about. Per the SBA website, for the 12 months ending in Nov. 30th, 2011, the FRS pension fund earned a total of 3.58%.
You are correct the fund earned 14% in 2010, in 2011 the FRS fund earned 22%.
Look it up in the provided link and try not to twist short term numbers. By the way, the 3.58% earned for that month beat the projected return of 3.08%. Like I said stop trying to twist monthly short term reports into your twisted the sky is falling BS.
Here are some more meaningful long term numbers showing the FRS fell short of its return goals:
3 year - 4.05%
5 year - 4.92%
10 year - 5.50%
15 year - 7.45%
The SBA is not composed of a bunch of Warren Buffett clones, they outperform their benchmarks because they create the benchmarks after the performance numbers are in for the period in question. It's a very deceptive performance comparison.
Read the latest Annual Report, and then relax. The pension plan is fine, but don't let the facts get in the way of the anti-pension, anti-public employee, pension envy populist, political agenda: https://www.rol.frs.state.fl.us/forms/2009-10_Annual_Report.pdf
And, don't forget that the FRS contribution rates are adjusted annually in accomodation of the anticipated rate of return and actuarial data. During periods of high returns, the contribution rate was reduced and the politicians running the agencies spent the "savings" however they pleased. During periods of low returns, contribution rates are increased and the politicians get to lie that the pension plan is "unsustainable".
Just more political shenanigans.
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