Tuesday, June 3, 2008

Actuarial Shenanigans in NY

Actuaries are supposed to provide honest guesses about future cash flows, but according to an article in today's NYTimes, that hasn't always been the case when it comes to NYC pension programs. Apparently an actuary hired by city public employee unions has admitted his work was heavily skewed in favor of finding low future costs for program expansions, and thus akin to "voodoo."

To make matters worse, the article states that once public employees receive a benefit, the New York State Constitution prohibits tampering with it. This creates a far more grave problem that that facing U.S. Social Security, whose benefits are not guaranteed by the U.S. Constitution.