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Public Pensions Fail Simple Math

amoncrief Wrote: Jul 27, 2012 2:56 PM
Ransom, you should learn that capitalism rests on the foundation of contract law, and that our US and state constitutions include contract clauses. Public pensions may be reformed, however, these reforms will honor the sanctity of contracts, or be struck down. More news. Social security is not a contractual obligation of the US government. States cannot declare bankruptcy under federal law. Why do you cite historical bond returns and stock returns separately as if there is a choice between the two? Public pension plans have diversified portfolios. Congress has recently approved a private pension plan assumption rate of about 7 percent (in the highway bill), not that far off from public sector pension plans. Visit saveperacola.com.

There is a dirty secret about state entitlements that liberals don’t want you to know. The collection of a state pension increases the chances that a pensioner will live in poverty. That’s because money put aside for state-guaranteed benefits can not be safely invested at rates that provide for more than a modest retirement unless the state subsidizes retirement benefits through taxes or if retirement savings are invested in riskier, higher yielding investments. Since governments are loath to raise taxes to subsidize a riskless retirement, benefits are eventually reduced. It works that way in London and Moscow as well as Madison...

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