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Thursday, September 25, 2008
Time The Conqueror
Time will tell whether the OIC's decisions bear fruit, but the OIC's track record is certainly admirable up to this point. I don't think this year is going to be good for any accounts without a guarantee, and those with a guarantee will chew up enough of the reserve that the PERS Board will have a ready-made excuse to not pay anyone over the guarantee for another long stretch of time. I think they were considering a possible payment over 8% in this current year had Wall Street performed like it had since 2003. But alas, the sticky terms of HB 2001, passed in 2003 make this year's result dial the clock back again to the beginning so that PERS will have to replenish the reserves again when the market goes up, and hold the reserves stable for 3 consecutive years. As I've predicted before, HB 2001 has always been diabolical and pretty much guarantees nothing more than the guaranteed rate, whatever it is, for the rest of the Tier 1 members' life expectancies. Time conquers all.