[Below is the text of an as-yet-unpublished letter I sent to The Des Moines Register last week. I've had several letters to the editor printed over the years, but I haven't written any recently due to lack of time and lack of confidence that anyone even reads that section of the paper anymore. Regardless, this letter follows the theme of every other one I've written - wasting taxpayer money.]
Before becoming too content with the recent 'good news' that the IPERS pension plan is improving while nearly $5 billion underfunded, one needs to more closely consider a statement from the consulting actuary that's buried in The Register's December 3rd article.
The actuary noted that one reason the projected shortfall has been reduced is due to changes in actuarial assumptions on the plan's liabilities. In other words, an accounting maneuver has simply made it look as though the plan will not cost taxpayers as much as before.
Those few who understand traditional pension plan valuation know that actuarial assumptions are often too optimistic, especially in public sector plans. In the end, the true cost of the IPERS plan - actual benefits and expenses paid - will very likely be much greater than currently projected.
Unfortunately, taxpayers won't be able to change an actuarial assumption to reduce their liability.
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