To: 68skylark
I suspect that the politicians in this case also have a garbled & incomplete grasp of the facts -- that's how these problems become so large in the first place. Hey, isn't that why politicians hire people (FSAs) like you? To give them a clearer and more complete grasp of the facts?
Most every public plan has been able to meet its actuarial rate (around 8.5%) over the past 10 years. Why are there unfunded liabilities? Because the plan sponsors haven't been making their actuarially determined contributions.
To: SolidSupplySide
Well if neither side wants to hear the cold truth, then an actuary like myself can do almost nothing.
And in my professional opinion, I don't think 8.5% is a reasonable figure for real-world pension returns, either for the recent past or for the future. A rate of 8% to 8.5% could only be appropriate for a plan that was willing to skillfully (i.e. passively) invest 100% in equities, and then not raise benefits when they run into a few years in a row of unexpectedly good returns -- so they'll have a cushion for the years of unexpectedly bad returns. There are very few private plans with that kind of skill and discipline, and no public plans.
7 posted on
02/07/2005 9:16:04 AM PST by
68skylark
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