Pension Math Doesn’t Lie

To the editor:

Steven Malanga’s calculations are, by turns, misleading and faulty [“Scary Pension Math,” Winter 2016]. He begins by arguing that pension fund returns since 2009 have compared unfavorably with those of the Standard & Poor’s 500 Index. This math would matter if pension funds were equity investments, but they’re not. Pension funds invest in a diversified asset pool that includes stocks, Treasuries and government bonds, corporate bonds, real estate, and more.

Malanga also downplays a critical fact: pension funds are long-term investors that focus on stability. One or two years of low returns—even losses—are tolerable because the focus is on maintaining smooth returns over cycles of three to five years.

Malanga lays blame at the feet of public pension funds themselves, asserting that they have “saddled themselves with” $1 trillion or more in debt—a figure plucked, by the way, from “research organizations” fueled by foundations with an unbending right-wing agenda. At the same time, he fails to acknowledge that public employees fulfilled their side of the bargain and never had the luxury of skipping payments.

Hank H. Kim, Esq.

Executive Director and Counsel

National Conference on Public Employee Retirement Systems

Steven Malanga responds:

Kim resorts to the old chestnut that pension funds are long-term investors whose results shouldn’t be judged by “one or two years” of low returns. But my article relies on data and experiences going back to the late 1990s, specifically because I wanted to show that pension debt is accumulating through far more than just a few quarters.

One would hardly describe the Pew Charitable Trusts, whose research I cite, as a right-wing organization. But more to the point, the Pew numbers are not estimates; they are derived from the reports of the pension industry itself. Other researchers suggest that the tab is much higher, including that well-known “right-wing” organization the Federal Reserve, which now puts pension debt at $1.7 trillion.

Over a period of more than a decade, through market booms and busts, pension debt has continued to grow. If, after the third-longest bull market in U.S. history, pension debt has barely declined, when can taxpayers hope for the relief from rising debt and rising taxpayer contributions that Kim and his industry have been telling us for years is coming?

No Secret Bias

To the editor:

Your criticism of Harvard’s admissions policies [“Fewer Asians Need Apply,” Winter 2016] is unfounded. While differences have existed in average test scores between ethnic and racial groups, the university has never lowered standards to accept applicants not well qualified to do high-level academic work. Harvard recognizes that a campus with differences in background and interests enhances the learning experience of all.

Robert C. Waggoner

Dennis Saffran replies:

The numbers speak for themselves. The Asian-American share of the student body at Harvard and other Ivy League schools has remained in the 14 percent to 19 percent range over the last 20 years. Waggoner ascribes this to the value that Harvard places on students with varied extracurricular interests and backgrounds. This was precisely the excuse that Harvard used to impose a de facto Jewish quota in the 1920s. The flatlining of Harvard’s Jewish population from the 1920s to the 1940s and its Asian population since the 1990s are starkly similar.


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