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URL:  http://boards.fool.com/i-suppose-they-could-but-i-am-not-sure-how-many-30770780.aspx

Subject:  Re: Proposal to end public pensions Date:  7/11/2013  10:44 AM
Author:  JLC Number:  428477 of 455447

I suppose they could, but I am not sure how many do that. Virginia was using an overly optimistic 7% discount rate whereas Moody's recommended they use a 5.5% projection, which is closer to realistic in my view.

I'm definitely conservative in my projections, I'm counting on 4-5%.


I don't know if that is a straw man or not. I only know that my wife's pension is not predicated on such an assumption in the first place.


Not intended to be a strawman. Here is the first hit on Google, need to scroll to the last page to get specific pension assumed returns. The lowest I saw was 7%. The median seemed to be about 8%. Way too high still, IMHO. But the higher the projection, the less money you have to commit, thus making it easier to "balance" the budget.

http://www.nasra.org/resources/InvReturnAssumption_Final.pdf...

I do recall reading a WSJ article a couple years ago here some pensions in California and Illinois were assuming a 12% return at that time.

Here is a decent review from a year ago about how bad things actually are. With one person calling for using 6% as their projection return.

http://www.reuters.com/article/2012/07/23/us-usa-pensions-fi...

JLC
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