I think that most of the nation’s fiscal problems are. Something that can’t go on, won’t.
7 thoughts on “The Pension Crisis”
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I think that most of the nation’s fiscal problems are. Something that can’t go on, won’t.
Comments are closed.
I wonder what the actual rates of return have been for each state over the past 5-10 years? If they have been substantially less than the 7-9 percent projected by the pension managers, how do those managers avoid accountability for those errors year over year?
Hey, what are youse looking at, STFU! And nice family you have there, I hope nothing happens to them.
“I wonder what the actual rates of return have been…”
Under generally accepted accounting principles, pension plans should use reasonable investment forecasts, such as the yield on high-grade municipal bonds, currently running between 3 and 4%. However since most government pensions are adjusted for inflation one must use real rate of return which is returns minus inflation, currently running 1-2%, so actual projections should use something closer to 2%. Depending on fund allocation, any number of studies show that over the last 20 years real returns run between 1 and 4%. Split the difference, 2.5% is a good average of real yields over the past 20 years.
or a balanced portfolio between High grade muni’s, Equities and
a smattering of risk assets such as real estate(Existing office or apartment buildings), Venture Capital and short term Commercial paper.
But it’s been hard to support much over 5% with a straight face.
Most people have wildly underfunded 401Ks. It’s a huge problem.
Half of all Baby Boomers only have Social Security, it’s going to be a big mess as they really start retiring.
Good info to have, thanks. Of course, since government-reported inflation rates specifically exclude food and energy (too volatile) then the “adjustment for inflation” is potentially under-estimated as well. Could it be that virtually all pension funds have been eroding significantly for the past couple of decades and have been propped up by accounting gimmicks?
Could it be that virtually all pension funds have been eroding significantly for the past couple of decades and have been propped up by accounting gimmicks?
To ask the question is to answer it.
Let it come down. Let it all come down!