"Ever wonder how public pension systems forecast that they will earn 7.5 percent to 8 percent annually on investments? It's like making sausage: If consumers knew the process they wouldn't buy it -- or, in this case, buy into it.
Yet, when a pension board sets its assumed rate of return -- how much it expects to earn from holdings such as stocks, bonds and real estate -- the decision significantly impacts taxpayers.
The higher the rate, the less employers and employees must contribute now to fund future retirement benefits. But if projections don't pan out, the shortfall must be paid off solely by future taxpayers."
- Daniel Borenstein
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This is a scam of the highest significance to tax payers. When the economy goes bad and the rate of return from pensions do not materialize. Then, tax payers are legally obligated n most instances to foot the bill.
I'm not worried, this is not sustainable. What happens when there is no more tax payer money to fund broke pension systems?
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