Friday, July 27, 2012

Public Sector Pension Follies: Wayne County Edition

As Instapundit often writes concerning the subject of public pensions: Something that can’t go on forever, won’t.

One can expect that the mess of a pension system in Wayne County (The County dominated by Detroit) similarly won't continue, unfortunately the taxpayer will likely be on the hook for the mismanagement and malfeasance.

After all, its only underfunded by $800 million dollars.

The Detroit News: Bad Wayne County pension bets take toll County retirement fund suffers investment losses of $340M since 2008

A $340 Million dollar loss isn't pocket change, and the article goes on to detail some interesting ways in which the money was lost, and the fund is performing worse than 97 percent of similar public funds.

As one would expect, not only are the pension funds badly managed and enmeshed in graft and corruption, but the incredibly rich benefits given to public employees with taxpayer funds will take their toll and make the fund unsustainable:

Pension board members said the system is strained because County Executive Robert Ficano's retirement incentives allowed workers as young as 37 to retiree with a $42,000 pension. In the last five years, the average annual pension has increased 30 percent to $23,145.

A lifetime pension of $42k per year to a 37 year old? Think about how much money that will be over the persons lifetime? With an average life expectancy of 78 years, that's $1,722,000.

Having the right connections in Wayne County and getting on the pension gravy train is the equivalent of winning a lottery, paid for by the public.

Any remaining questions as to why the Wayne County pension plan is under strain?

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