Public Pension Funds and Phantom-Style Bookkeeping

Public Pension Funds and Phantom-Style Bookkeeping

Great pensions were always the carrot for those in the past who were willing to accept below-market salaries to work for government. Then the labor unions came along, easily got in the door and rectified the salary imbalance.

At the same time they asked for and got liberal pensions as well. Why not? Politicians had the taxpayers to help out with the funds and times were good.

So government salaries are now on a par or are better than in private industry and pensions are often treble industry’s average and sometimes higher.

It is obvious, however, that many public pension funds are not properly financed. The union heads have known it for years. Pension obligations go far beyond what can be eventually paid.

And so phantom-style bookkeeping has often taken over. Such as anticipating impossible future earnings to increase decreasing reserves. But chances of getting earnings of that size will be impossible in the economy we can reasonably expect.

Phantom-style bookkeeping creates phantom pension payments.