But these questions will work very well for the U.S., too:
1. How much should the taxpayer have to contribute to public sector pensions?
….
2. What will the accrual rate for the career average scheme be?
….
3. Will all public sector schemes face the same contribution hikes?
….
4. Will the government introduce primary legislation to put the new framework in place?
….
5. Which price index will the government use to uprate post-retirement pensions?
Putting these into U.S. English, the bottom line is how much should public employees cost?
How much of various risks should the taxpayers pay to take away from public employees? Longevity risk? (pensions paid as a life annuity as opposed to lump sum in cash) Inflation risk? (that’s question 5 – relating to cost-of-living adjustments post-retirement) Investment risk? (A guaranteed payment amount at retirement, no matter what the underlying investments do)
There are insurance products that exist in the private market that are there to hedge these risks, either in combination or separately. And the government accounting standards used to value these guarantees put the values at much less than what private insurance companies have to hold in risk capital plus reserves for covering the exact same guarantees.
Because the government doesn’t go out of business, supposedly.
Think on that.
- Excited
- Angry
- Not as Angry
- Bored
- Indifferent
- Sad
