In the past, responsibly run pension funds projected a conservative rate of return to account for these risks. The problem isn't the financial model of pension

In the past, responsibly run pension funds projected a conservative rate of return to account for these risks. The problem isn't the financial model of pensions, but the politics of it. Lowering the expected rate of return of a pension fund causes a huge increase in the funding requirements that are calculated, and a suddenly appearing budget problem such as this is bad news for people's political careers. The same problem exists in the private sector. Changing the model to project a lower rate of return hurts profit numbers in the near term and makes a huge liability appear on the balance sheet, so executives will kick the can down the road as much as they can. The problem is only worse with public sector pensions because of regulatory differences.