Monday, February 1, 2016 – 08:30 a.m.
It’s nice that San Bernardino County coffers are flush with money.
Because it looks like it’ll be needed for the pension fund, the San Bernardino County Employees Retirement Association (SBCERA).
For the second-quarter ended December 31, 2015, the fund lost 0.4%.
In it’s fiscal year to date, SBCERA has returned -3.5%. That’s negative 3.5%.
The development brings the funds one, three, five and ten year return numbers well below the actuarial hurdle of 7.5%. Longer term comparison numbers are deteriorating, but at a slower rate.
The actuarial return hurdle is the investment return needed to pay all benefits and fund expenses.
A tough investment climate that has been hard on both stock and bond markets has made it difficult ot generate needed returns. Especially when the return needed is 7.5%.
To be fair. Comparable funds have been having the same difficulty. But SBCERA intermediate and longer term performance rankings have started to deteriorate over time.
The negative returns require county supervisors to allocate additional general fund money to pension contributions.
Almost two years ago county staff told the board of supervisors that the county was over the pension funding hump. They were wrong!
I would suggest that everyone read the articles on http://www.pensiontsunami.com and wake up to the fact that most pensions in our country have unfunded liabilities (No money for future obligations). CAL-PERS and other government pensions are not making 7.5% per year to sustain the retirement piggy bank. The winners are the people who are retired or about to retire as they will collect from the pension piggy bank before it goes bankrupt.
Will it go bankrupt? I believe it will and my guess we will see this in our lifetimes perhaps in 10 or 15 years. The pension system cannot be sustained.
There will be a recession in 2017 and it will be a deep recession.