4 ms·

Interesting you bring this up, because the average assumed rate of return for pension funds is 7.7%: https://reason.org/data-visualization/public-pension-plans

• redis_mlc 5y ago
  This is from memory, but here's what went down in Calif. The accountant for the public pension funds gave the numbers for 6%, 7%, and 8% returns. Obviously the 8% annual return was the least likely to be sustainable. To maintain favor from unions, 8% was selected by politicians. (Around 20%-22% of any population worldwide works for the state, so public unions easily capture their politicians.) And here we are, with every city and county in Calif. headed off a cliff. (The only exception I'm aware of is Mountain View, which owns a business park that contributes 1/3 of city revenues. Some towns further north on the peninsula are complete basket cases, with some getting fleced in the 2008 meltdown.) So if the accountant had just quietly omitted 8%, bk wouldn't be looming as certain as 7%. A former San Jose mayor tried to reign in pensions, and was vilified for even trying. The trope is, "Every town in California will have one city hall staffer to write checks, with 100% of town revenues going to public pension retirees." One town accountant said, "I felt physically ill writing pension checks to a 39 yo healthy retired firefighter." because that check stream would go on until he was probably 100 yo, contributing to bk'ing the town.