[68skylark]

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.

[Carry_Okie]

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.

Agreed, 4-6% is historically more realistic. Given the nation's trade balance, currency, and debt load, even that may be too rosy.

[SolidSupplySide]

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.

I work for a plan sponsor with an actuarial rate of 8.5%. We've beaten it over the 3 year period (recent past) and 10 year period (longer recent past). We're going to beat it this year. The underfunded status of most pensions is not that the investments haven't performed, it is that the plan sponsors haven't funded them according to the actuarial requirements. This is particularly true for public plan sponsors.