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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsPublic Pensions Faulted for Bets on Rosy Returns
Few investors are more bullish these days than public pension funds.
While Americans are typically earning less than 1 percent interest on their savings accounts and watching their 401(k) balances yo-yo along with the stock market, most public pension funds are still betting they will earn annual returns of 7 to 8 percent over the long haul, a practice that Mayor Michael R. Bloomberg recently called indefensible.
Now public pension funds across the country are facing a painful reckoning. Their projections look increasingly out of touch in todays low-interest environment, and pressure is mounting to be more realistic. But lowering their investment assumptions, even slightly, means turning for more cash to local taxpayers who pay part of the cost of public pensions through property and other taxes.
In New York, the citys chief actuary, Robert North, has proposed lowering the assumed rate of return for the citys five pension funds to 7 percent from 8 percent, which would be one of the sharpest reductions by a public pension fund in the United States. But that change would mean finding an additional $1.9 billion for the pension system every year, a huge amount for a city already depositing more than a tenth of its budget $7.3 billion a year into the funds.
full: http://www.nytimes.com/2012/05/28/nyregion/fragile-calculus-in-plans-to-fix-pension-systems.html?pagewanted=all
Article also discusses public pension issues in: New York City; Rhode Island; and San Jose, CA.
onethatcares
(16,184 posts)over the life of the plan,(whole life I think). now that I'm getting near the end of the plan, I get letters
explaining why the return can't be as high as "guaranteed".
but you can bet your ass if I told them I could only pay x amount for the policy due to changing financial
times, they'd cancel in a heart beat (mine).
ProgressiveProfessor
(22,144 posts)I am involved with multiple retirement systems. All of them are overly rosy compared to what is available to day.
Recently I was taken to task for doubting Social Security's health...perhaps now some here will acknowledge the issue.