4 ms·
Kind of interesting that sort of conclusion / assertion gets mentioned without inferring that moentary policy is so out of whack that "Saving" the old fashioned
by 6stringmerc 10y ago
Kind of interesting that sort of conclusion / assertion gets mentioned without inferring that moentary policy is so out of whack that "Saving" the old fashioned way is not a good course of action. Those pension plans were based on about a 7% return, which ain't crazy, but now seems nearly out of reach without significant risk (re: equitites afloat on easy money). Staggering the factors at play here...Fed Policy, Healthcare Inflation, Stagnant Worker Wages...ugh
- yompers888 10y agoIt's very common (a) for 7% to be an unrealistic return for pensions, given their allocations; and (b) for pensions funds to estimate even higher (8 or 9%) growth rates. I can't speak to the majority of pensions funds, but there are State funds that assume 8.5% returns while having 50-60% of the fund in bonds. Those are the Minnesota numbers, and they tend to be pretty good for a State. They're ~75% funded, and that makes them 19th best in the country. If you face the reality that their assumptions are insane, then you have the wrestle with more realistic projections of how much they've really funded.