The fools running public pension funds

Reports the New York Times:

While Americans are typically earning less than 1 percent interest on their savings accounts and watching their 401(k)balances yo-yo along with the stock market, most public pension funds are still betting they will earn annual returns of 7 to 8 percent over the long haul, a practice that Mayor Michael R. Bloomberg recently called “indefensible.”

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.

This is particularly appropriate in Illinois, where the widely quoted $86 billion in unfunded public pensions is really a chimera. For years, the fund managers had been publicly projecting unrealistically high returns.




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    Chicago Tribune contributing op-ed columnist and author of forthcoming historical novel, "Madness: The War of 1812." Reporter, editor and columnist for Chicago Sun-Times and Chicago Daily News. Freelance writer and editor.

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