Pension funds' rosy forecasts | Arkansas Blog

Monday, May 28, 2012

Pension funds' rosy forecasts

Posted By on Mon, May 28, 2012 at 7:22 AM

Here's a national story with direct relevance to Arkansas. In the midst of national markets in which average returns have been zero for a decade or more (a net loss on S&P 500 since 2000), giant public pension funds are still figuring future benefits on average annual investment returns of 8 percent.

If you can get 8 percent annually somewhere, let the world, or at least me, know, please. The problem:

Now public pension funds across the country are facing a painful reckoning. Their projections look increasingly out of touch in today’s 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 city’s chief actuary, Robert North, has proposed lowering the assumed rate of return for the city’s 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.

But to many observers, even 7 percent is too high in today’s market conditions

.

This is why the defined benefit pension is a dinosaur, much as I hate to say it.

Tags: ,


Sign up for the Daily Update email
Favorite

Comments (13)

Showing 1-13 of 13

Add a comment

 
Subscribe to this thread:
Showing 1-13 of 13

Add a comment

More by Max Brantley

  • Where's the outrage?

    Am I the only person, apart from federal prosecutors, outraged about the criminal enterprise that inveigled itself into a privileged position as an Arkansas taxpayer-financed human services provider to the tune, today, of $43 million a year?
    • Jun 21, 2018
  • Where's the outrage?

    • Jun 21, 2018
  • Rutledge opponent hits her socializing with corporate interests

    Mike Lee, the Democratic candidate for attorney general, has criticized Attorney General Leslie Rutledge over recent reports of her participation at private meetings where corporate interests make big contributions to a political group she heads for access to state legal officers.
    • Jun 21, 2018
  • More »

Readers also liked…

Most Viewed

  • Hucakbee interviews Trump

    In an interview with former Arkansas Governor Mike Huckabee that aired last night on TBN, President Trump calls the reporting on how thin the nuclear agreement with North Korea is "treasonous" and suggests that the U.S. should stop providing aid to Honduras and other countries where immigrants are fleeing unspeakable violence in search of a better life.

Most Recent Comments

Slideshows

 

© 2018 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation