New York City Pension Fraud

The New York Times reports:

Every year since 1999, New York City has reported that it has all the money it needs to pay for the pensions that have been promised to city workers.


With the retirement plans said to be financially sound, state politicians have happily showered city employees with generous pension enhancements - annual cost-of-living increases, holiday bonus payments, early retirement with full benefits - that are the envy of private-sector workers, whose pension benefits have eroded.

But a close inspection of city pension records shows that the funds committed to the plans may fall well short of the city's promises to hundreds of thousands of current and retired workers. They look fully funded chiefly because the city has been using an unusual pension calculation that does not comply with accepted government accounting rules. Even the city'’s chief actuary, who helps produce the annual reports, says the official numbers are "“meaningless" when it comes to showing the plans'financial health.

The chief actuary, Robert C. North, has prepared a little-noticed set of alternative calculations showing that the gap in the pension funds could be as wide as $49 billion. That is nearly the size of the city'’s entire annual budget and the equivalent of the city'’s publicly disclosed outstanding debt.

The existence of a big gap between the city'’s future obligations and the resources committed to meet them does not mean the pension funds are about to run out of money. But it does mean that New York City is promising its current employees future benefits it might not be able to provide without big tax increases or major budget cuts. When such a reckoning might occur, if at all, is hard to predict.

Pensions are now one of the city'’s fastest-growing expenses. In recent years the city'’s required contributions to its pension funds have more than quadrupled, to $4.7 billion this year from $1.1 billion in 2001.

Enron really did run a more honest operation.The amount of outright fraud here is beyond belief.Politicians promise government workers pensions by fraudulently selling sunny budget numbers to the public.Today's politicians might not be around for the disaster in the making.Of course government workers vote for politicians who promise them compensation they couldn't get in the private sector.Nothing is more dangerous than government workers getting pensions.Do you really trust Moody's and S&P to put an accurate bond rate on NYC's muni bonds? For a great book on why "democracy" promotes this kind of massive fraud that wouldn't be tolerated in the private sector read Hans Hermann Hoppe's Democracry The God That Failed.