By firing its actuarial consultant last week, the New York State Legislature shone a light on one of the public sector?s deepest secrets: All across the country, states and local governments are promising benefits to public workers on the basis of numbers that make little economic sense. The numbers are off-base for a variety of reasons. Sometimes there is a glaring conflict of interest, as there was in Albany, where the consultant was being paid by the workers seeking richer benefits. More often, there is subtle pressure on the actuary to come up with projections that make the pension fund look good. Most of all, public pension actuaries use old methods that have fallen far out of sync with the economic mainstream.
See "Actuaries Scrutinized on Pensions", Mary Williams Walsh, The New York Times, May 21, 2008