A Good Primer on the Public Pension Crisis
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  • Jim__L

    Interesting idea — require pension projections (and therefore contributions) to be tied to the Fed’s Prime Rate. Lower rates, lower projections; lower rates, higher contributions.

    If the Fed keeps the rate at zero, pensions have to assume the returns on their money (money that competes with the Fed’s money) will be considerably reduced.

    It’s the only way for the system to reflect reality.

  • Kavanna

    Ultimately, the pensions crisis is a result of the explosion of municipal hiring and benefits in the 1990s and 2000s, and the delusional Greenspan-Bernanke era of bubble blowing: a false sense of high returns/low risk was created inside of what amounted to a glorified welfare system. The Fed is still trying to keep this going, while municipalities have to figure out how to return to the basics of local government without special interests controlling how money is spent and commitments are made. Discretionary and responsible control was abandoned to special interests and public employee unions decades ago.

  • Andrew Allison

    If the pensions being paid exceed the contributions to, and growth of, the
    fund assets, the assets must decline. What the unions are doing, in effect, is attempting to protect the pensions of those who have retired at the expense of those who have not in anticipation of a taxpayer bailout. I wouldn’t want to bet my retirement on that happening.

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