We are almost at the end of the PSERS story. If you are new to the Blog, you should start at the beginning of the series, here.
We have previously established that, as of 2013, PSERS had a shortfall of $32.6B between benefits promised and funds in the plan. And, according to PSERS itself, the causes of this shortfall were:
- $14.0B – Employer Funding Deferrals
- $9.0B – Investment under-performance
- $8.9B – Unfunded Benefit Enhancements
- $0.8B – Divergence between experience and actuarial assumptions (demographics, salaries, etc)
There are really only two pockets from which the needed funds could come — from the plan participants, or from employers. How might we decide how much each party should contribute to the solution? How about in proportion to the funding gap each side caused? Thinking about it this way, I would assign $$ as follows:
