Cost of pensions Soars on Long Island, NY

These folks have their facts mixed up. Stock markets go up and down, not in direct correlation to the economy. Sometimes the markets rallies while the economy is still weak, for example. So when the writers say:

The soaring costs have been largely triggered by stock market losses during the depths of the recession in 2007 and 2008.
. . .
The huge contribution increases – and those forecast – are primarily a result of stock market losses from the financial crisis of 2007 and 2008.

The writers are do not understand the relationship between financial markets and the economy. That’s understandable because most people do not, myself included. But to blame “Wall Street” or “bankers” for the pension problems problem misses the point. Even if the financial mess did not take place, the stock market would still go up and down.  Here is a cause of the pension shortfall:

At the time, fund administrators dropped employer contribution rates to near zero. Had the state kept contributions at a higher rate, there would likely be a cushion now in tougher times, experts say.

“It was irresistible for state and local officials to say, ‘Let’s pocket that money and use it to replace our contributions so everyone can feel good about it,’ ” said James Parrott, chief economist at the Fiscal Policy Institute, a Manhattan-based liberal think tank. “It was a stupid fiscal move.”


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