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Again, discount rate assumptions don't directly affect the cost of the pension. The liabilities will be what they will be. Returns will be what they will be, th
by cool_dude85 3y ago
Again, discount rate assumptions don't directly affect the cost of the pension. The liabilities will be what they will be. Returns will be what they will be, though of course assumptions impact the amount of risk you take as you attempt to achieve the assumed return.
And even with passively managed indexes the pension fund will win. Who's paying fewer basis point for this index fund, you or the billion dollar pension fund? If they achieve similar results then still the pension will have you beat.
- lotsofpulp 3y agoI think we are referring to costs in different contexts. If I may switch to a different term, the outgoing cash flow will be what it will be, the question is where and when and from whom is the incoming cash flow? In the context of this thread, apparently some of it will be from people who pay parking meters for the next 70 or so years. Is that what the plan was when this cash flow was promised to voters and recipients 20, 30, 40 years ago?
- cool_dude85 3y ago>In the context of this thread, apparently some of it will be from people who pay parking meters for the next 70 or so years. Is that what the plan was when this cash flow was promised to voters and recipients 20, 30, 40 years ago? I don't know about the City of Chicago but most pensions were pay-as-you-go til the 80s or 90s, so the voters then probably agreed that they should pay benefits for retirees then and future citizens and taxpayers should pay for benefits now. The advent of the pension fund means that it's now more common for taxpayers today to set aside a separate fund from which some or all future benefits will be paid. Just a different way of doing things.