In his Apr. 3 Commentary Page article, "Public pension plans and funding adequacy," Thomas J. Cavanaugh responds to my own commentary, "The high cost of failing to police public plans," which appeared in the Dec. 26 issue of Pensions & Investments.
Mr. Cavanaugh quotes statistics from a survey sponsored by the Public Plans Coordinating Council, which is supported (as was mentioned in his commentary) by administrators of state and local retirement systems.
In contrast, the figures I quoted about the serious underfunding of public plans were reported by the Pension Research Council, an independent research operation associated with the University of Pennsylvania's Wharton School in Philadelphia.
Further, Mr. Cavanaugh ignores the fact that my commentary mentioned both the unfunded liabilities of state and local government employee pension plans, which total $125 billion, and the liabilities of plans covering federal workers, which swell the deficit to $1.24 trillion.
Many plans are adequately funded, but it is very significant that a much greater percentage of all public plans are significantly underfunded than private sector pension plans, which are subject to federal funding rules.
With regard to the absence of federal funding standards (or "pension police") for public pension plans, it may be true that state courts can enforce locally legislated funding rules. But, in my opinion, the absence of uniform funding rules for all public plans poses great risks.
The growing liabilities of public plans increase the risks of higher taxes for everyone and reductions in Social Security benefits and further restraints on tax-favored retirement vehicles for citizens who are not fortunate enough to be covered by (or retained by) public retirement plans.
I might add that my commentary (and my testimony with regard to the well-funded California Public Employees' Retirement System, to which Mr. Cavanaugh also referred) was based strictly on an analysis of facts.
The risks from the unfunded liabilities of public plans are tangible and my comments on the need for federal standards for funding all public plans hardly constitute "inaccurate and sensationalist rhetoric."
Martin Stempel
Senior vice president
McGinn Actuaries Ltd.
Anaheim, Calif.
You are mistaken to suggest the New York City Employees Retirement System believes "Philip Morris' shareholders would be better off if the company divested its tobacco operations" ("Shareholders switch proxy battle tactics," Pensions & Investments, April 3, page 25).
NYCERS has not taken a position on the divestiture of the tobacco operations at Philip Morris or at any other tobacco company.
Rather, we sought a meeting with the board to discuss what the board believed should be done, after the company itself raised the question.
Jon Lukomnik
Deputy comptroller for pensions
City of New York
Office of the Comptroller
Bureau of Asset Management
New York
