Tuesday, February 28, 2012

Cities Borrow From New York Pension Fund

Cities borrow from pension instead of making contributions
[C]ities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.
Across New York, state and local governments are borrowing $750 million this year to finance their contributions to the state pension system, and are likely to borrow at least $1 billion more over the next year. The number of municipalities and public institutions using this new borrowing mechanism to pay off their annual pension bills has tripled in a year.
This will end well /sarc.
"This sort of behavior ought to earn a long stay in prison
"How the actuaries and other financial watchdogs allow this is beyond me. This is a fraud upon the public, a fraud upon the pensioners, and a fraud upon the workers who are being promised those pensions. It is a scam; you cannot borrow from yourself and claim you have somehow improved your own lot, as you've done no such thing -- you have simply moved money from one bucket to another. When this sort of scam becomes commonplace you know that the end of the line is near -- this is such a blatant rip-off that nobody in their right mind would attempt it unless they were literally at the end of their rope. By borrowing from the very fund that you're allegedly funding you are, in each and every instance, destroying the already-accumulated surplus that is already pledged to pay other people!"

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