Sad to say, but it’s always refreshing — encouraging — to see people with a platform take a sober approach to pension funds, as Tom Ward does in the Valley Breeze:
In the “old days,” pre-recession, savers could earn a 3 percent guaranteed return at their local bank or credit union. So could the pension funds. And that 3 percent got managers a long way in reaching their goal for pensioners. With that safety net removed, and with much lower returns from safe government and corporate bonds, the 7.5 percent growth hurdle is much harder to reach. In fact, with most of the best stock market gains behind us for this cycle, I expect it will become clear soon that pension fund estimates will have to be adjusted.
Looking at related questions back in 2012, I noted that the pension fund essentially required a decade that mirrored the 1950s, ’80s, or ’90s. That struck me as a long-shot back then, but we’re now well into a long period of insufficient growth and overdue for a slip.
As currently constituted, Rhode Island’s public-sector pension system — like pension systems across the country — is simply fraud, selling employees and retirees benefits (with the help of labor unions) based on an investment scam and placating taxpayers with imaginary math. This won’t end well, and it will only end worse if the general public doesn’t get smart enough to call officials on the baloney and demand a straightforward and agreeable resolution.